Date
July 30, 2025
Category
Down 50% YTD, Does UnitedHealth Stock Offer an Opportunity?
Once a reliable performer, UnitedHealth (UNH) stock has taken a massive hit in 2025. Currently, it’s down around 50% year to date, making it the biggest loser in the Dow Jones index. Could the rapid decline here-which has wiped out around five years of gains-be an opportunity for investors? Let’s take a look at the setup.
Why UNH stock has tanked in 2025
It’s not hard to see why UnitedHealth stock has been crushed in 2025. For a start, the company’s Q1 earnings1 in April were very disappointing. Here, UNH surprised investors with its first earnings miss since 2008 ($7.20 per share versus the consensus forecast of $7.29). It also shocked the market by lowering its full-year earnings per share (EPS) guidance from $29.50-$30 to $26-$26.50. At the time, the insurer attributed the lower guidance to greater-than-expected demand for medical care, particularly in physician and outpatient services. It also blamed “unanticipated changes” in the profile of Optum Health members, which impacted planned 2025 reimbursements.
UNH then shocked the market again in mid-May2 by suspending its annual forecast due to surging medical costs and announcing that CEO Andrew Witty had resigned. These developments sent the stock down nearly 20% to a four-year low. Witty was replaced by Chairman Stephen Hemsley, who was CEO of the company between 2006 and 2017 and oversaw a period of strong growth for the business. However, this didn’t help sentiment towards the stock; with other insurers such as Humana and Elevance Health performing adequately, investors began to question whether UnitedHealth’s issues were company-specific, rather than a reflection of broader industry trends.
May also saw UNH embroiled in a range of issues that hurt its share price. On May 153, the stock slumped after The Wall Street Journal reported that the US Department of Justice was carrying out a criminal investigation into the company for possible Medicare fraud. The stock then took another hit on May 214 after the UK’s Guardian newspaper reported that the company had made secret payments to nursing homes to keep residents out of the hospital, risking their health.
More recently, UNH disappointed investors again when it posted its Q2 earnings5. Here, the company posted adjusted EPS of $4.08 per share, down from $6.80 a year earlier and well below the consensus estimate of $4.48 per share. It also lowered its full-year guidance again; it now expects 2025 EPS of just $16 (analysts had been expecting $20.90). Company executives attributed the guidance cut to higher medical costs than expected (it now sees medical costs for the year coming in $6.5 billion higher than initially projected). On the back of these results, the stock fell another 7.5%.
The outlook from here
As for whether the stock can rebound from here, it’s certainly possible. Management clearly believes that it can fix the company’s current problems and put it back on a growth trajectory. “Many of the issues standing in the way of achieving our goals as well as our opportunities are largely within our control,” said new CEO Stephen Hemsley on a call with investors in May. “UnitedHealth Group has embarked on a rigorous path back to being a high-performing company fully serving the health needs of individuals and society broadly,” he said more recently in the Q2 earnings, adding that the company is positioned for a return to growth next year.
In an effort to turn things around, management is making a number of moves designed to boost operational performance. These include improving pricing, advancing the company’s foresight acumen, enhancing business practices, and improving the consumer and provider experience. It also plans to accelerate investments in key areas to strengthen foundations and modernize the business. Note that the company has a strong balance sheet (at June 30 the ratio of debt to total capital was 44.1%), so it has the financial firepower to try and repair its problems.
It’s worth pointing out here that in June, the company increased its quarterly dividend by 5% to $2.21. This could be seen as a vote of confidence from management. UNH also continues to make buybacks, returning $5.5 billion to shareholders in the first half of 2025. If management was concerned about the outlook, it’s unlikely that the company would be increasing its dividend and buying back shares.
Zooming in on the stock itself, it is currently trading at valuation that is well below the market average. At today’s share price of $250, the forward-looking price-to-earnings (P/E) ratio using the EPS forecast of $16 is just 15.6. Note that many analysts believe that the $16 EPS forecast offers potential to surprise to the upside. “While the $16 EPS floor was lower than expected, it does give investors/analysts a base to model off of, and potentially sets up UNH to return to the ‘beat and raise’ cadence that its investors had become accustomed to,” said Novare Capital Management Research Analyst James Harlow after the Q2 results were posted.
Interestingly, while many analysts have reduced their UNH price targets recently, the average price target remains well above the current share price. According to LSEG, the average price target is $3396 at present. That’s approximately 36% higher than today’s share price. So, the general consensus is that the stock – which currently has an “oversold” RSI reading – offers the potential for upside.
Of course, there are no guarantees that the stock will hit that level or that it will rebound in the near term. According to analysts at RBC Capital Markets – who have a price target of $2867 – Medicaid rate and Medicare advantage headwinds are likely to continue next year. Analysts at Morgan Stanley, meanwhile, have said that the pathway to a recovery is not entirely clear and that the company has a lot to prove in terms of execution, particularly across Optum Health. Ultimately, for the stock to recover, the company will need to rebuild trust with investors.
Footnotes:
1UnitedHealth Group Reports First Quarter 2025 Results and Revises Full Year Guidance, as of April 17, 2025
2Yahoo Finance, UnitedHealth Group stock sinks as CEO steps down, company suspends guidance, as of May 13, 2025
3Reuters, UnitedHealth tumbles as criminal probe report adds to investor fears, as of May 15, 2025
4The Guardian, Revealed: UnitedHealth secretly paid nursing homes to reduce hospital transfers, as of May 21, 2025
5UnitedHealth Group Re-Establishes Full Year Outlook and Reports Second Quarter 2025 Results, as of July 29, 2025
6LSEG, as of August 1, 2025
7Investing.com, RBC Capital lowers UnitedHealth Group stock price target to $286 on margin headwinds, as of July 30, 2025
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