UNH: Strong Buy Signal from Analysts. Jump ?

Mixed Tuesday.

To me, it was a “mixed” trading day in US market on Tue, 13 May 2025 after a weaker-than-forecast inflation data was released.

This was just as what I have “expected” & expressed in my post dated 13 May 2025. Click here ! for reasons why, Repost to share ok. Thanks.

When trading ended on Tuesday, Dow fell, while S&P 500 & Nasdaq rose: (see above)

• DJIA: -0.64% (-269.67 TO 42,140.43).

• S&P 500: +0.72% (+42.36 to 5,886.35). Closed with a YTD gain for the 1st time since late February 2025 with 19 posted new 52-week highs and 6 posted new low.

• Nasdaq: +1.61% (+301.74 to 19,010.08). 2,590 stocks rose and 1,904 fell as advancing issues outnumbered decliners by a 1.36-to-1 ratio.

On Tuesday, 17.81 billion shares changed hands compared with 16.51 billion, moving average (ma) for the last 20 trading sessions.

US’s April 2025 CPI (Final).

Above is the finalized US’s April 2025 inflation readings.

Looking through all 2025 data, inflation is slowly creeping back into the economy based on monthly readings.

Yet, market rejoiced and rallied because data came in weaker-than-forecast, giving market sufficient ammunition to rally right from start of trading morning.

Logically speaking, a rational analyst should not react as such. This is because inflation rose instead of continued to cool. How could this be “good” for US economy?

Nonetheless, Trump again called on US central bank to cut interest rate in the face of softer inflation. Through verbal abuse, name shaming tactics of course. Ever the opportunist.

Why Dow Fell ?

The Dow fell sharply (-4.0%) right from start of the trading Tuesday.

Decline was primarily due to negative news from $UnitedHealth(UNH)$, a major component of the index. (see below)

All Negative News:

• The abrupt resignation of CEO Andrew Witty due to personal reasons.

• At the same time, it has also suspended its 2025 profit outlook, citing surging medical costs and higher-than-expected expenses related to Medicare Advantage beneficiaries.

• The double blow of (a) leadership uncertainty and (b) withdrawal of financial guidance-triggered a steep selloff of UNH.

• It plunged by -17.79% ($311.38) by end of day. Intraday, it fell as low as $309.60.

• As the Dow is price-weighted, UNH’s sharp drop had an outsized negative effect on the entire index.

The above are but two of a series of unfortunate events befalling the healthcare insurers.

Others are :

• December 2024: Tragic murder of UNH’s CEO Brian Thompson.

• Q4 2024: Reaffirmation of full-year guidance that many considered ill-timed in light of the subsequent crisis, further eroding investor confidence.

• 17 Apr 2025: Weaker than expected earnings and guidance cut.

• April–May 2025: Medicare Advantage struggle with surging medical costs, with (a) utilization rates rising twice as fast as projected, and (b) a sicker-than-expected new member profile.

• April - May 2025: Optum Health revenue also fell -5.3% YoY due to weaker risk scoring, rising utilization, and CMS model changes.

• Ongoing: Ransomware Attack Aftershocks. Continued to deal with aftermath of ransomware attack that (a) hampered claims processing and (b) increased operational costs

All these weakened UNH and at the same time, dragged its peers down in the process.

Below are, top 3 decliners on the same day:

• $Elevance Health(ELV)$ fell by -9.91% on Tuesday.

• $Humana(HUM)$ declined by -9.48%.

• $CVS Health(CVS)$ also fell by -6.65%.

Latest Price Target & Rating.

Despite all the unfortunate events that befall UNH one after another, Wall Street analysts still have the following ratings & targets for UNH.

• Morgan Stanley, Analyst, Erin Wright maintained an ‘Overweight’ rating and $563 price target, that is a +80% upside from the last close.

• RBC Capital, xx, Ben Henrix maintained an ‘Outperform’ rating and $525 price target, that is a +68% upside from last close.

• Cantor Fitzgerald maintained an “Overweight” rating and lowered price target to $440 (from $660), that is still a +41% upside from last close.

UNH Still A Buy ?

UNH have had a horrible month, losing -37% after a relatively good period beforehand.

Instead of being rewarded, shareholders who have already held through the last 12 months are now sitting on a -36.69% YTD price drop.

After such a drastic fall, UNH's price-to-earnings (P/E) ratio becomes 15.5x.

This makes it look like a “Buy”especially when its peers (in US) have a P/E ratio above 18x with a few P/E's above 32x.

Lest we forget, UNH is still the undisputed leader in the Healthcare sector.

Also retrospectively, in FY 2024 it delivered an exceptional +45% gain to it's bottom line.

Also, its latest 3 year period has also seen an excellent +32% overall rise in EPS, aided by its short-term performance.

Therefore, it's fair to say the earnings growth recently has been superb for UNH.

A Graying Society.

US is considered an ageing society in the coming 1 to 5 years.

By 2025, people aged 65 and older will make up about 18.6% of the population.

This proportion is projected to rise to 20.7% by 2030-meaning 1 in 5 Americans will be 65 or older.

This also implying that healthcare is going to be more crucial in the near future.

For LT investors, there is never a better time than now, to get one’s feet wet in Healthcare stocks or ETFs. Agree ?

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

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• Do you think Healthcare stocks & ETFs will be a mid to long term investment ’?

• Do you think it is timely to look at UNH or its peer stocks seriously before it recovers ?

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