Keith Speights, The Motley Fool
5 min read
In This Article:
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Most of UnitedHealth Group's issues should be temporary.
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The two biggest threats to the healthcare giant are iffy.
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The price is right to buy UnitedHealth Group stock after its steep decline.
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.
I have a different opinion, though. I think it's time to buy UnitedHealth Group stock. Here are three reasons why.
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.
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.
