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UnitedHealth Group (UNH) has recently emerged as one of Wall Street’s most discussed – and most criticized – stocks. After years of steady growth, the company’s stock has fallen roughly 40% year-to-date in 2025, making it one of the worst-performing S&P 500 Index ($SPX) stocks this year. The stock has also dropped nearly 52% from its 52-week high of $630.73.
While the market is bearish on UNH stock, I believe the majority of its problems are only temporary and that it will recover. This could be a rare opportunity to buy this blue-chip stock at a discount.
About UnitedHealth
UnitedHealth Group, valued at $272.7 billion, serves customers around the world through two main businesses: UnitedHealthcare (the company’s health insurance arm) and Optum (data, pharmacy, and care services). The company’s scale, network, and diverse model give it a competitive advantage over peers.
What Caused the Decline?
UnitedHealth’s Medicare Advantage division, a major revenue generator, was severely impacted by the new CMS V28 payment rule, which tightened risk-score rules and reduced reimbursements. This created significant margin pressure. The company pulled full-year guidance for adjusted earnings to range between $26 and $26.50 per share due to rising medical costs and ongoing uncertainty. The company also announced Andrew Witty’s unexpected resignation as CEO, and former CEO Stephen Hemsley’s return to help stabilize operations.
Soon after, a report stated that the Department of Justice is investigating UnitedHealth’s Medicare Advantage coding and billing practices, which shook investor confidence. However, UnitedHealth denied the reported probe.
Is There a Possibility for Revival?
UnitedHealth’s stock recovery is dependent on several key developments over the next few months. To begin, a sudden change in C-Suite leadership often has a significant impact on the company’s stock. However, the appointment of ex-CEO Stephen Hemsley to lead the company may benefit UnitedHealth. Hemsley could help restore operational discipline and transparency. If he is successful in improving internal reporting and communication, he may be able to rebuild trust with regulators and investors.
Second, the DOJ’s alleged investigation has not yet been confirmed. Even if an investigation is confirmed, any fines or settlements may have a short-term impact on the stock. If the DOJ investigation does not result in severe penalties, the stock has the potential to recover.
Despite its current struggles, UnitedHealth remains a healthcare behemoth. Over the past decade, the company’s revenue and earnings have steadily increased. It generated more than $400.3 billion in revenue in 2024, representing an 8% increase. In the most recent first quarter, total revenue increased by $9.8 billion to $109.6 billion. Furthermore, the company continues to generate strong operating cash flows. It has a steady dividend yield of 2.9%, which is higher than the healthcare average of 1.6%. A low payout ratio of 34.5% suggests that earnings can cover dividend payments, which appeals to long-term income investors. In Q1, the company returned nearly $5 billion to shareholders through dividends and share repurchases.
While the company is dealing with unexpected cost pressures and utilization spikes, particularly in Medicare Advantage, leadership is confident in the company’s ability to adjust course. Hemsley recently stated that the challenges were caused by both external pressures and internal missteps, but that the majority of the issues are under the company’s control. He also reaffirmed his belief in UnitedHealth’s value-based, integrated care strategy and promised to restore growth through urgent, disciplined execution. The new CEO also reiterated long-term goals of modernization, innovation, and achieving 13% to 16% earnings growth over time. Analysts expect the company’s earnings to fall 19.4% to $22.2 per share in 2025, before rising 17.3% in 2026.
With a forward P/E ratio of around 12x, the stock is trading at roughly half of its five-year historical average of 25x, making it an attractive entry point for long-term investors.
What Does Wall Street Say About UnitedHealth Stock?
Overall, UnitedHealth stock is a “Moderate Buy” on Wall Street. Of the 24 analysts that cover the stock, 15 rate it a “Strong Buy,” two say it is a “Moderate Buy,” and seven rate it a “Hold.” The average analyst target price of $363.52 suggests the stock can rebound and climb by 20.9% from current levels. Plus, the Street-high estimate of $440 implies the stock can rally as much as 46.3% over the next 12 months.
The Verdict
UnitedHealth is fundamentally sound and provides long-term value, but it is facing a perfect storm of regulatory, legal, and cost-related challenges. Long-term investors may see current levels as a rare opportunity to buy a blue-chip healthcare stock at a discount. For risk-averse investors, it is wise to steer clear of the stock until the regulatory fog clears and earnings transparency improves.
