United Health Stock: Time for a Reassessment
United Health stock (UNH) has been volatile recently, affected by disappointing earnings, leadership changes, and challenges across the sector. The company is currently facing heightened scrutiny, legal issues, and instability within its leadership. As the year unfolds, investors are keeping a close watch on the progress of ongoing investigations and the company’s ability to rebuild trust and stability. Key factors influencing UNH include recent developments, earnings revisions, and broader market conditions.
A Quick Recap of Our Last Analysis on United Health Stock
We first covered United Health stock in February, suggesting it might be a good opportunity when it was trading around 460 USD, with a target price of 620 USD. Over the following month, UNH rallied to nearly 600 USD, even as the broader markets dropped nearly 20%. While we had initially set a target of 620 USD, considering the market decline, we now view our call as nearly perfect.
The Earnings Miss and Its Aftermath
On April 16th, UnitedHealth Group posted disappointing earnings, which caused the stock to fall more than 50%. Here’s why we haven’t reentered:
The earnings report was much worse than expected, and as usual, we typically wait around two weeks for analysts to release their updates, especially after a bad earnings report.
The revisions for United Health stock were notably negative.
Above: Earnings revisions for UNH, sourced from SeekingAlpha.com as of May 20, 2025
For the next several years, the annual earnings projections for UnitedHealth Group were revised down by 15%-20%. This significant drop is a major red flag, indicating that the earnings miss wasn’t just a one-time event but could signal ongoing issues with profitability.
Experience tells us that such steep cuts in earnings projections usually point to further downside. However, when United Health stock dropped to around 400 USD, we started to think about when we might start considering a long position.
CEO Departure and Legal Troubles: More Red Flags for United Health Stock
Just as we were beginning to consider a potential rebound, UNH faced further challenges. The CEO left for “personal reasons” after the Department of Justice announced a criminal investigation into the company’s Medicare practices. This sudden leadership change raised questions about the company’s future.
On Wall Street, there’s a joke that when a CEO leaves for “personal reasons,” those reasons might involve preparing for legal consequences. We do not suggest that this is the case with the stock, but it’s certainly a possibility worth noting.
To add to the uncertainty, President Trump also made critical remarks about the healthcare sector, increasing the volatility surrounding United Health Group Inc.
Assessing the Risk: Is There Fraud at United Health
The situation is increasingly complicated, with many unknowns. As a rule, when things become too complex, we tend to stay on the sidelines. Our primary concern now is whether there could be a larger fraud issue at UnitedHealth Group. While we think this is unlikely, we cannot ignore the risk.
The company is widely respected in the healthcare industry, but the combination of the CEO’s sudden departure and the criminal investigation is extremely rare. The effects on United Health stock are still unfolding, and it may take months before we fully understand whether any fraudulent activity is involved.
Even if no criminal issues are found, UnitedHealth Group is facing operational headwinds, making 2025 a tough year. We do not expect the situation to improve much in 2026, and with the healthcare sector under increased scrutiny, we anticipate further volatility.
The Road Ahead: Staying on the Sidelines for Now
In light of the uncertainty surrounding UNH stock, our plan for the time being is to stay on the sidelines. We will be closely monitoring the company’s earnings and guidance over the next six months to better understand its outlook for 2026 and beyond. While the potential for long-term gains remains, the risks in 2025 are too high, especially given the current volatility in both the company and the broader healthcare sector.
We may revisit United Health stock in 2026, but for now, it is simply too risky to enter a position with so much uncertainty surrounding the company and the healthcare market as a whole.