Key Takeaways:
- UnitedHealth CEO, Andrew Witty, recently announced his resignation, and UNH suspended its full-year outlook.
- UnitedHealth Group trades at its lowest P/E valuation multiple in the past 5 years.
- Earnings and dividends are both expected to grow at over 10% annually after 2025.
- Analysts currently see about 72% upside for UnitedHealth stock, although price targets are likely to fall in the coming weeks.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
The ancient philosophy of Stoicism and the newer principles laid out in the The 48 Laws of Power come from completely different worlds, but they share a powerful idea:
Ignore what you can’t control and focus only on what you can.
We can’t control what price a stock trades at.
However, we can control the actions we take.
If you think about it, as investors, we never leave the driver’s seat. There’s an illusion that we’re on a volatile rollercoaster and we have to react to every twist the market throws at us.
But the truth is, we ultimately get to choose how we act. We started this journey to build wealth, gain freedom, and improve our financial circumstances, and with the power of time and the correct outlook, those goals are still very much achievable today.
I’d invite investors to view UnitedHealth’s plummeting stock price as an opportunity for further research. The stock is down nearly 40% in the past month, which means the risk/reward profile for $UNH stock is actually substantially stronger today than in recent months, even though there’s a lot of bad news surrounding UnitedHealth Group.
Today, the stock trades at just 14x next year’s expected earnings, which is the lowest multiple the stock’s traded at in the past 5 years. Additionally, earnings are expected to resume double-digit growth after a brief dip in 2025, so the stock looks truly cheap today:
UnitedHealth is the largest health insurance company in the U.S., and it’s built like a machine.
With strong earnings, growing dividends, and consistent free cash flow, UNH offers a rare mix of quality and growth in the healthcare space.
If you feel unsure about UnitedHealth or the stock doesn’t feel right for you, simply skip the stock and look for something else. There’s always another opportunity around the corner. Again, you are always in the driver’s seat, and the market simply presents you with opportunities.
Let’s dive into UnitedHealth Group.
Why Is UnitedHealth Stock Down Nearly 40% in the Past Month?
UnitedHealth’s stock is down almost 40% in the past month. Here’s what’s behind the recent drop:
- Leadership Turmoil and CEO Resignation: CEO Andrew Witty abruptly resigned amid a series of crises, including a major cyberattack, the aftermath of a fatal shooting of a top executive, and escalating regulatory scrutiny. His departure, coupled with the reinstatement of former CEO Stephen Hemsley, has raised concerns about leadership stability and the company’s strategic direction.
- Suspension of 2025 Financial Outlook: UnitedHealth suspended its 2025 earnings guidance due to unexpected increases in medical costs, particularly within its Medicare Advantage segment. This move has heightened investor uncertainty regarding the company’s future financial performance.
- Regulatory Investigations and Legal Challenges: The company is under investigation by the U.S. Department of Justice for its Medicare billing practices. This scrutiny has intensified investor concerns about potential legal liabilities and the impact on UnitedHealth’s operations.
Even with those headwinds, UNH remains a profit powerhouse. The core insurance and Optum segments are still growing, and margins remain strong.
It’s worth monitoring these developments to see how they impact future profits, but it’s also likely that the stock could be oversold today.
Analysts Think the Stock Has About 70% Upside (This Will Likely Decrease Over Time)
Today, UnitedHealth has an average price target of about $548/share, based on the average of 26 analysts’ price targets. With the stock down about 16% in a day, the stock trades at around $318/share (much lower than the $379/share shown in the visual below), which implies about 72% upside for the stock today.
Analysts are likely to lower their price target from $548/share as they factor in the uncertainty caused by CEO Andrew Witty’s resignation, UNH suspending its full-year outlook, regulatory investigations, and legal challenges.
Still, even if the stock had 30-40% upside today, it would certainly be worth a closer look.
See why UnitedHealth looks undervalued today with TIKR (It’s free) >>>
1: Dividend Yield
UNH’s forward dividend yield is currently about 2.3%, which is the highest it’s been in the last 5 years.
This spike is due to the stock’s massive pullback. The company is still expected to see safe, steady earnings and dividends, so this could be an opportunity for long-term dividend-growth investors.
Find dividend stocks that are even better than UnitedHealth today with TIKR. (It’s free) >>>
2: Dividend Safety
UNH has a very healthy payout ratio. In 2024, the company paid out $8.18 in dividends per share, while generating $27.66 in normalized EPS, which puts the dividend payout ratio at just under 30%.
We like to see stocks with a payout ratio below 70%, which means UnitedHealth is comfortably below this threshold.
This means that no matter what happens to UnitedHealth, it’s highly unlikely that the company is going to cut its dividend.
Based on analysts’ estimates, both earnings and dividends are expected to rise steadily in 2026 and beyond.
See UnitedHealth’s full growth forecast and analyst estimates. (It’s free) >>>
3: Dividend Growth Potential
Over the past 5 years, UnitedHealth has grown EPS at a 13% compound annual growth rate, and dividends at a 15% CAGR.
Analysts expect mid-teens earnings growth in 2026 and 2027 after the -5% expected earnings dip in 2025. Dividends are expected to continue growing at near double-digit rates as well.
While UNH only offers a 2% dividend yield today, its ability to grow both earnings and dividends year after year makes it a standout for long-term dividend growth investors.
TIKR Takeaway
Analysts currently think UnitedHealth has about 70% upside today. While that expected upside is likely to fall, $UNH trades at its lowest valuation multiple in the past 5 years.
The stock looks quite undervalued today, and might be worth a closer look for investors.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
