Opinions The Monthly Gems by Allan Tong
UnitedHealth Group IncUNHTOP PICKJan 02, 2024
Stock price when the opinion was issued
As of Aug 17, 2026. Market Open.
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(Note the shortish timeframe.) Bumpy road. Biggest weight on stock has been Trump administration's proposal to essentially flatten (increase of 0.1%) Medicare Advantage rates in 2027. That miniscule increase combined with medical cost inflation really puts pressure on.
Trying to prioritize margins over growth. Insurance products will be repriced next year, should see better growth in topline and bottom line.
He owns CVS instead, and a third of their business is health insurance, which 100% of UNH's business. The problem with US healthcare is all the news coming out of Washington. A lot of their business is dictated by the whims of one or two people in the U.S. Still a good business, but is a little speculative.
Previous CEO was starting to fall short. Fears of overstating revenues, sparking an internal investigation. US federal regulator trying to cut healthcare costs in general, which will challenge HMO companies like this one. He imagines stock will sit here for a while until new CEO is able to turn the ship around, or until US healthcare industry sees some change and HMOs get pricing power back.
This space is not a guarantee. Avoid.
Fortunately, he sold around $560. A bit of a quicker trade than usual for him. Company's gone through a lot of changes -- new CEO, higher costs than expected, more regulatory scrutiny. Chart's improved somewhat, so it's on his radar. Might be basing. Still below 200-day MA, and a move above that would be a positive. There's been some buying from major institutions.
Likes it long term. Last year was tough. Now seeing a bit of recovery. Thinks most headwinds will fade, a lot of them were just medium-term issues. Medical cost inflation in US has been extremely high. Believes 2027 guidance is extremely conservative. Earnings revisions should move higher. Beneficiary of AI improving efficiencies.
Jamie Murray 
American healthcare
As noted, 2023 was unkind to healthcare stocks, but UNH shed only 1%, thanks to a rebound in Q4. UNH remains America's biggest health insurer. It beat its last four quarters, trades at a safe 0.62 beta as well as a 22.85x PE, which is historically in-line. Earlier in 2023, the stock took a hit when the company noted that post-Covid the U.S. was seeing a rebound in elective surgeries, which would increase medical costs and cut into UNH's margins. However, this is a passing concern. View UNH in the long-term. Its shares have climbed 144% in five years and the projectory has been largely up, though the last two years have been bumpy. As we exit post-Covid, Wall Street expect UNH to resume its climb. Analysts signal 20 buys, one overweight, five holds and one sell with a price target of $594.61, nearly 13% higher than its last close of $526.47. Go long on UNH.