Stock price when the opinion was issued
There has been concern over paying nursing homes to not send patients to hospitals. He is not sure if this true but it raises caution. There is also concern over the U.S. trying to not pay claims. The U.S. administration is going after costs in health care and profits in PDM. There is likely more bad news coming out. After three years it should probably be OK.
It is one of the most integrated companies in U.S. health care. They thought it was very oversold so they doubled down on their position and will trend back. She is looking for 13 to 16% long term upside but doesn't consider it a buy and hold. Should be a high quality compounder.
She averaged down and bought at $273 in May. Stock's been under a lot of pressure. Largest US healthcare manager, with strong vertical integration. Guidance cut, EPS outlook dropped. Under 11x forward PE despite 13-16% long-term target EPS growth. Sees ~25% upside from here.
It has had issues and it has been a tough year facing several challenges. Owns it in the global equity fund. He is waiting for the conference call tomorrow which should talk about how the issues are being dealt with. They have pulled their guidance on EPS and the new CEO could be putting out a new guidance level. Wait for the base line to grow but there is long term upside.
Nothing is too big to fail, but UNH is so integrated into the US healthcare system that they are an essential service. Problem is more people are getting utilization in areas that are higher cost. So, their estimates got blown out. Has long owned this. He recommended it for its multiyear consistent earnings. They just reported and are guiding resumption of growth in 2026. Is at a 35% discount to its 3-year forward earnings. He was buying this morning on their earnings call.
Time will tell is they recover or not from the recent slide (shares fell by half). Their medical cost ratios have risen and we'll see if they maintain a higher level. There were fewer medical procedures during Covid, but has since increased, but also has pushed up costs for the insurers. But some issues may be temporary, including Medicare and Medicaid rates.