To The Moon

$UnitedHealth(UNH)$  

​ Overview: What’s Driving the Decline?

Massive drawdown: UNH shares plunged from approximately $600 in mid‑April 2025 to around $241–$260, a decline of ~55–60% .

Catalysts: A combination of dramatically rising medical claims, underfunded Medicare Advantage programs (resulting in an 89.4% medical cost ratio)—and regulatory and DOJ scrutiny over billing practices—triggered sharp earnings downgrades and leadership reshuffles .

Analyst reviews: Bernstein recently lowered its 12-month target to $337, while UBS maintains a $330 target, and average consensus across 23–24 analysts ranges from $320–$405, signaling potential 30–70% upside if recovery unfolds .

Valuation: Current forward P/E sits at ~11–13×, far lower than historical norms, prompting some analysts to call it “oversold” and potentially a trough year before recovery in 2026 onward .

Technicals: The recent formation of a “death cross” (50‑week MA below 200‑day MA) and oversold RSI levels suggest bearish momentum, with technical supports near $250 and $215 if the decline continues .

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​ Key Price Levels & Scenarios

Support zones:

Strong support may exist around $250 (May 2025 lows)

If broken, a potential retest of $215, which lined up with trading ranges from 2017–2019 .

**Multi‑target analyst range:**

**$320–$340:** Mid-range forecast favored by UBS and Bernstein

**$370–$405:** More optimistic targets reflect longer-term recovery expectations (source: analyst consensus) .

**Bear thesis (“$160” scenario):**

Some commentators suggest further downside if earnings guidance remains weak or regulatory/legal complications deepen, but most sell-side targets don’t approach $160. Thus, $160 appears highly pessimistic and unlikely under base-case assumptions.

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​ Buy Now vs. Wait: Key Considerations

1. Buy now (“Buy and forget it”)

Pros:

Valuation is historically low, with a meaningful dividend (~3.6–3.7%) offering yield as investors wait .

Analysts expect stabilization and recovery in 2026–2027 driven by premium hikes, cost controls, and remediation actions .

Cons:

Key risks remain unresolved: DOJ investigation, Medicare billing scrutiny, and current earnings guidance for 2025 ($16 EPS) is well below prior expectations ($24–$30) .

If cost trends worsen or company outcomes disappoint again, downside toward lower supports (near $215) is possible.

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2. Wait for lower prices

Potential scenarios to watch:

Near-term: If UNH violates the $250 support, downside toward $215 is feasible technical risk zone.

Catalyst points: Wait until Q3 or full-year earnings deliver clarity: acceptance of EPS baseline, legal/regulatory resolution, or guiding commentary on 2026 expectations could form a better entry point.

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​ Decision Framework

Strategy Target Entry Range Rationale

Buy now ~$240–$260 Discounted valuation, dividend income, long-term recovery visible

Staggered entry Add at ~$215 or near support Mitigate risk if downside persists, extra discount

Wait for confirmation Post‑Q3/Q4 earnings & clarity Reduced uncertainty before committing further capital

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​ Final Thought

If you believe UNH’s current troubles reflect a cyclical trough and expect recovery with margin improvements, buying near $240–$260 may offer an attractive risk/reward, particularly if complemented by dividend yield.

But if you’re wary of continued earnings pressure or legal/regulatory setbacks, waiting for technical support levels around $215–$250, or clarity post‑Q3 earnings, may be prudent before increasing core exposure.

The $160 downside scenario is not supported by mainstream analyst models and can be viewed as a more extreme bearish case—unlikely unless fundamentals further deteriorate.