UnitedHealth Group (UNH) has been hit hard by recent news, with its stock price plummeting almost 50% since early April. The company recently reported a rare earnings miss in Q1 2025, and subsequently pulled its full-year guidance due to rising costs and increased insurance utilization.
The situation took a turn for the worse when the CEO resigned, and the US Department of Justice launched an investigation into potential Medicare fraud by UNH. Additionally, the Centers for Medicare & Medicaid Services announced plans to conduct audits on all eligible Medicare Advantage contracts between 2018 and 2024, further casting doubt on the company’s future.
One top investor, Cavenagh Research, is skeptical about a turnaround in UNH’s fortunes. The investor cites structural margin compression, wage inflation, and regulatory headwinds as major concerns, which will erode the company’s historical defensive premium and compound downside risk. The new rate notice for 2025 could lead to a 3-5% revenue decline per member, while retrospective audits may “claw back” millions of dollars in past overpayments.
With 90,000 clinicians and staff employed, even small wage increases could lead to significant incremental cost increases for UNH. Regulatory overhang is also likely to persist, with the company’s large size making it a target for scrutiny. Cavenagh Research rates UNH a Sell, citing structural vulnerability that the market has yet to fully price in.
Despite this pessimistic view, Wall Street remains bullish on UNH, with a Moderate Buy consensus rating and a 12-month average price target of $377.77, representing upside potential of nearly 24%. However, investors are advised to do their own analysis before making any investment decisions.
Source: https://www.tipranks.com/news/only-the-beginning-says-top-investor-about-unitedhealth-stock