Why UnitedHealth Stock Can Still Gain After This Year's 24% Rally -- Barrons.com

By Doug Busch

UnitedHealth Group stock has staged an impressive recovery from last year's selloff, but its current valuations suggest there are more gains ahead as the insurer's profitability accelerates.

Shares have rallied over 60% from their March lows near $256, bringing year-to-date gains to 24% alongside a reliable 2.3% dividend yield. But don't let its rally dissuade you from buying the stock -- technical analysis suggests it has more room to run.

Momentum was recently reinforced following third-quarter results, where management raised full-year 2026 guidance. Wall Street consensus remains overwhelmingly constructive. Sell-side price targets are clustered in the mid-to-high $400s, compared with the stock's recent $409. That implies attractive risk-adjusted upside for a premier managed-care operator whose earnings power is firmly re-accelerating.

As a healthcare provider, the stock operates within an overlooked subsector of the broader healthcare complex that is demonstrating outstanding leadership. Over the trailing six months, the State Street Health Care Select Sector SPDR Fund, also known by its ticker XLV, has ranked as the top-performing major S&P sector, advancing 30%. But industry concentration is particularly evident in the iShares U.S. Healthcare Providers ETF, which has gained 26% so far this year and trades just 1% beneath its 52-week high. The fund cleared a $58 bull flag trigger two weeks ago, resolving a consolidation pattern that originated from an aggressive 11-of-14-week winning streak between April and July that generated a near 50% advance.

As the the XLV's largest constituent with a portfolio weighting exceeding 20%, UnitedHealth serves as the engine of this subsector advance.

On its multi-decade monthly timeframe, UNH successfully defended its rising 200-month simple moving average in both August 2025 and March 2026. This dynamic long-term baseline holds profound historical significance. It was last tested during the depths of the global financial crisis in the first quarter of 2009, an inflection point that launched a historic multi-year bull cycle from $16.18 to a record peak of $630.73 in November 2024.

Let's take a closer look at the daily and weekly charts to see what the price action is telling us.

Looking at the daily chart, UnitedHealth's ratio chart against the XLV has lagged since mid-July. However, price action continues to reflect resiliency. Over the trailing month, UNH advanced 12% after successfully testing and rebounding off its rising 200-day simple moving average. This primary impulse initiated in earnest on July 7, with a 9% gap-up that completed a bullish island reversal, closing just above the very round $300 number before propelling shares on a rapid $150 advance over the ensuing three months.

From those highs, the stock digested gains via a constructive double-bottom consolidation, which originally formed following a pullback sequence marked by a bearish filled-in candle and a doji on July 16 and 17. It trades 11% below its 52-week high and has been declining in an orderly fashion in October, not recording more than a two-day winning streak.

Price action has now confirmed a successful retest and defense of its $406.63 double-bottom breakout pivot. One can enter here and this stock could reach $507 by mid-2027, a 28% gain from current prices. Remain bullish above $390.

UnitedHealth Group was trading around $412 Friday.

Turning to the weekly chart, the ratio chart against primary managed-care peer Humana has tracked in a persistent downtrend since the fourth quarter of 2024, decisively reversing an earlier 18-month cycle of relative outperformance.

On a price basis, selling originated in the second half 2024 near the very round $600 handle, triggered by a bearish dark cloud cover and a weekly doji across the weeks ending November 15 and November 22, 2024. That peak initiated a severe 63% drawdown that ultimately established the broad contours of an expansive cup with handle accumulation base beginning in April 2025.

Selling pressure reached definitive capitulation during the week ending August 15, 2025, when a textbook bullish morning star reversal ignited a 21% weekly surge on more than double the average weekly volume. Coinciding with this capitulation low was a lagging bearish death cross, a classic indicator phenomenon where moving average crossovers trigger after the bulk of the technical damage has already been done.

From that floor, the right side of the cup base took shape behind an aggressive seven-week winning streak across April and May, culminating in a furious 66% four-month advance. Overhead supply emerged as UNH's price confronted its declining 200-week simple moving average through the first three weeks of July, forming the pattern handle amid three consecutive doji candles. On this weekly timeframe, add above the $461.72 pivot.

Doug Busch is the senior technical analyst at Barron's Investor Circle. His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

October 31, 2026 02:02 ET (06:02 GMT)