Opinion: It's Time to Buy UnitedHealth Group Stock After a 50% Plunge
UnitedHealth Group (NYSE: UNH) might want to change its stock ticker from "UNH" to "UGH." The latter better captures the feelings of the healthcare giant's shareholders in recent months.
A string of problems has caused UnitedHealth Group's share price to plunge roughly 50% from the peak set in the fourth quarter of 2024. Some analysts have downgraded the stock, with HSBC recommending that investors reduce their holdings and slashing its price target.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
I have a different opinion, though. I think it's time to buy UnitedHealth Group stock. Here are three reasons why.
1. Most of the company's problems should be temporary
I don't think investors should ignore UnitedHealth Group's issues. However, the challenges should be viewed with a long-term perspective. I suspect most of the problems the company faces should be temporary.
UnitedHealth Group has already largely moved past the cyberattack that occurred in February 2024. Although it cost the healthcare company over $2 billion, that issue has already proven to be a short-lived one.
Higher Medicare Advantage costs are the main culprit behind UnitedHealth Group's suspension of its 2025 full-year guidance. But the company says that it expects to return to growth in 2026. I believe this prediction because it makes sense. Insurers sometimes incur higher-than-anticipated costs and feel the pain for a while. However, once they adjust premiums, the problem goes away.
UnitedHealth Group announced the sudden departure of former CEO Andrew Witty at the same time it withdrew its 2025 outlook. Any worries investors might have had surrounding this move probably dissipated quickly after they learned Stephen Hemsley was returning to run the company. Hemsley served as CEO from 2006 through 2017, a period when UnitedHealth Group stock more than tripled.
2. The two biggest threats to UnitedHealth Group are iffy
I also view the two biggest threats to UnitedHealth Group as iffy. What are those threats? An alleged U.S. Department of Justice criminal investigation of the company and President Trump's stated goal to eliminate pharmacy benefits managers (PBMs).
Noted that I used the word "alleged" to describe the U.S. Department of Justice probe. The Wall Street Journal reported on May 14, 2025, that "people familiar with the matter" revealed that the DOJ had launched a criminal investigation of UnitedHealth Group for possible Medicare fraud. However, the company quickly responded that it hadn't been notified of any DOJ investigation. That status hasn't changed.
President Trump did announce that he wants to "cut out the middleman," a clear reference to PBMs. That's easier said than done, though, to put it mildly.
Removing PBMs from the U.S. healthcare system would require a detailed, comprehensive plan that so far has not been provided. That plan would also have to pass in both the Senate and the House of Representatives. You can bet that the PBM industry, including UnitedHealth Group, would lobby fiercely against any such legislation. I think this threat, while serious, has a relatively low probability of actually materializing.
3. The price is right
Finally, I think all these issues are fully baked into UnitedHealth Group's share price. The stock currently trades at a forward price-to-earnings ratio of around 13.3. That's well below the S&P 500 healthcare sector forward earnings multiple of 16.6. It's also the lowest valuation for UnitedHealth Group in more than a decade.
Could the stock fall further? Maybe, but I believe that UnitedHealth Group's share price has bottomed out. You might have noticed that UnitedHealth Group's share price has traded in a relatively narrow range since the steep decline in April and May. This trading pattern seems to confirm my view.
Any good news for UnitedHealth Group could provide a nice catalyst. I predict that the company will have some positive developments in the not-too-distant future, potentially including new full-year guidance that calms investors. If I'm right, buying UnitedHealth Group stock now could pay off handsomely.
Should you invest $1,000 in UnitedHealth Group right now?
Before you buy stock in UnitedHealth Group, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and UnitedHealth Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!*
Now, it's worth noting Stock Advisor 's total average return is996% — a market-crushing outperformance compared to174%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of June 9, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CTV News
23 minutes ago
- CTV News
Hedge trimmers recalled, may activate unexpectedly
Winnipeg Watch A recall of hedge trimmers across Canada leads MedicalWatch for June 13, 2025.
CTV News
24 minutes ago
- CTV News
Family of Charleigh Pollock told decision coming soon on funding for her rare disease
Charleigh Pollock poses on a field trip with her classmates on June 13, 2025. Charleigh Pollock is a nine-year-old girl who suffers from Batten disease, a rare neurodegenerative disorder that leads to the progressive loss of brain function. Charliegh was diagnosed at the tender age of three after she began suffering from relentless seizures. She was put on a drug call Brineura, which slowed the progression of the disease and stopped the seizures – until the B.C. government informed her medical team in February that she would no longer be covered. 'The last five months have been agonizing,' said Jori Fales, Charleigh's mother. 'It's on our minds every night and every morning, all day long.' The drugs is expensive, Fales said, costing $844,000 per year. Charleigh's team appealed the province's decision and the health minister stepped in, extending the treatments while the appeal process was ongoing. Fales said she's recently been told a decision is coming soon. 'We will hear the final decision before the 19th of June,' she said. Charleigh's mother fears the worst if the appeal doesn't go in her daughter's favour. 'Brineura is the only defence against this horrible disease, so if you take it away she will decline, lose more skills and will leave us,' she said. The province's Expensive Drug For Rare Disease Committee has been tasked with making the decision if Charleigh's treatment will be funded going forward. During that appeal process the committee asked the Canada Drug Agency to do an evidence review for Brineura. The findings of that report is giving Charleigh's mother hope. 'It says, 'insufficient data to establish discontinued criteria,'' said Fales. 'Without the appropriate data to help inform stopping the drug, the discontinuation should truly be a clinical decision made with the health-care team and the families impacted with this disease.' Charleigh's medical team is in full support of the nine-year-old's continued Brineura treatment. June 19 – the same day the family has been told they will receive the province's decision – is also the next scheduled infusion treatment. If the decision doesn't go in Charleigh's favour, that will be her last treatment with the drug that her mother says is keeping her alive. 'Then we start preparing ourselves for the days ahead,' said Fales.
Globe and Mail
32 minutes ago
- Globe and Mail
Previewing Q2 Earnings Expectations
The expectation is for Q2 earnings to increase by +5.1% from the same period last year on +3.8% higher revenues. This will be a material deceleration from the +11.9% earnings growth in Q1 on +3.6% revenue growth. In the unlikely event that actual Q2 earnings growth for the S&P 500 index turns out to be +5.1%, as currently expected, this will be the lowest earnings growth pace for the index since the +4.3% growth rate in 2023 Q3. We have been regularly flagging in recent weeks that 2025 Q2 earnings estimates have been steadily decreasing, as shown in the chart below. The magnitude of cuts to 2025 Q2 estimates since the start of the period is larger and more widespread compared to what we have become accustomed to seeing in the post-COVID period. Since the start of April, Q2 estimates have declined for 14 of the 16 Zacks sectors (Aerospace and Utilities are the only sectors whose estimates have increased), with the largest cuts to Conglomerates, Autos, Transportation, Energy, Basic Materials, and Construction sectors. Estimates for the Tech and Finance sectors, the largest earnings contributors to the S&P 500 index, accounting for more than 50% of all index earnings, have also been cut since the quarter got underway. But as we have been pointing out in recent weeks, the revisions trend for the Tech sector has notably stabilized in recent weeks, which you can see in the chart below. We see this same trend at play in annual estimates as well. The chart below shows the Tech sector's evolving earnings expectations for full-year 2025 A likely explanation for this stabilization in the revisions trend is the easing of tariff uncertainty after the more punitive version of the tariff regime was delayed. Analysts started revising their estimates lower in the immediate aftermath of the early April tariff announcements, but appear to have since concluded that those punitive tariff levels are unlikely to get levied, helping stabilize the revisions trend. The chart below shows current Q2 earnings and revenue growth expectations in the context of the preceding four quarters and the coming three quarters. The chart below shows the overall earnings picture on a calendar-year basis. In terms of S&P 500 index 'EPS', these growth rates approximate to $254.04 for 2025 and $287 for 2026. The chart below shows how these calendar year 2025 earnings growth expectations have evolved since the start of Q2. As you can see below, estimates fell sharply at the beginning of the quarter, which coincided with the tariff announcements, but have notably stabilized over the last four to six weeks. Key Earnings Reports This week The Q2 earnings season will really get going when the big banks come out with their June-quarter results in about a month. But we will have officially counted almost two dozen quarterly reports from S&P 500 members by then. All of those reports will be from companies with fiscal quarters ending in May, which we and other research organizations count as part of the June-quarter tally. We have seen such fiscal May-quarter results from four S&P 500 members, including last Wednesday's strong release from Oracle ORCL. We have another six S&P 500 members scheduled to report results this week, including Accenture ACN, Lennar LEN, and others. Oracle shares were up significantly following the beat-and-raise quarterly release, which came after two consecutive quarterly reports that market participants had found disappointing. Oracle's cloud growth appears to have finally arrived, with fiscal 2026 cloud revenues expected to grow by +40%, up from the fiscal 2025 growth rate of +24% (Oracle's fiscal year ends in May). As noted earlier, the stock has spiked on the earnings release and is now up +29.3% this year, handily outperforming the S&P 500 index (up +2.1%) and the Zacks Tech sector (up +2.5%). Shares of IT consulting firm Accenture have been under pressure lately, reflecting a challenging operating environment for its end-markets. The stock is down -11.4% this year, which compares to a +2.1% gain for the S&P 500 index and a +2.5% gain for the Zacks Tech sector. The issues in the Accenture story, in a generalized qualitative sense, pertain to the negative effects on corporate IT budgets of the ongoing tariff uncertainty and the deflationary effects of AI-driven operating efficiencies. One could argue that Accenture's scale lends its results considerable stability, particularly in comparison to other peers like India-based Infosys, TCS, and Wipro. But these macro headwinds nevertheless limit the stock's near-term upside potential. The company is scheduled to report results on June 20 th, with estimates essentially unchanged over the last two months. Lennar, the homebuilder, is scheduled to report results after the market's close on Monday, June 16 th. The homebuilder is expected to bring in $1.97 per share in earnings on $8.24 billion in revenues, representing year-over-year changes of -41.7% and -5.97%, respectively. This is a challenging environment for Lennar and other homebuilders, with demand hindered by affordability concerns and elevated mortgage rates. The stock was down after each of the last five quarterly releases and has lost roughly a fifth of its value this year (down -20.3%), which compares to the Zacks Construction sector's -1.9% decline and the S&P 500 index's +2.2% gain. Q2 Earnings Season Scorecard As noted earlier, we have already seen fiscal May-quarter results from four S&P 500 members, which we include in our Q2 tally. Total earnings for these four index members that have reported results are up +4.7% from the same period last year on +8.6% revenue gains, with 75% of the companies beating EPS estimates and all beating revenue estimates. The comparison charts below put the Q2 earnings and revenue growth rates for these index members in a historical context. The comparison charts below put the Q2 EPS and revenue beats percentages in a historical context. We are not drawing any conclusions from these results, given the small sample size at this stage. But we nevertheless wanted to put these early results in a historical context. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Accenture PLC (ACN): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Lennar Corporation (LEN): Free Stock Analysis Report This article originally published on Zacks Investment Research (
