United HealthGroup (NYSE : UNH) up Over 37% From Lows : Is the Company Still a Buy?
For any company facing troubled times, managment is the key upwards driving factor of recovery, so it would be unreasonable not
to consider this factor. The current CEO is Stephen J. Hemsley, who was
appointed CEO replacing previous CEO Andrew Witty who resigned for undisclosed
personal reasons. Hemsley was already a notable and respected executive within
the firm : he served as CEO for nearly a decade until his stepping down in 2017,
when he gave up the position of CEO for chairman of the board. He served in this
position until May this year, when he was asked to retake his role following
great instability within the company as a result of a flurry of earnings misses,
lawsuits and most notably, the assassination of Brian Thompson, CEO of UNH's
insurance subsidiary. Hemsley built United HealthGroup from the ground up,
pushing the company to the position of the largest healthcare company in the
world following an over 200% surge in the stock price during his first tenure
and laying the groundworks for its continued growth which lasted well into the
early 2020s.
For any non-speculative investor, valuation is at the center of any
purchase of equities. UNH trades at a reasonable 17.26 P/E, highlighting
potential growth from its Optum business while pricing in the volatility of
earnings misses and unstable managment. This P/E ratio places it in the lower
bracket of healthcare companies, which underscores weary investor sentiment
concerning the firm's troubles. Earnings are stable and have been for many
years, as is typical for the defensive sector of healthcare; however, they are
expected to falter as margins fall in the coming years as healthcare subsidies
dissapear as is expected from the Trump administration. This is well priced into
the stock. On the other hand, analysts do expect revenue growth : around 4%
yearly growth is what many experts project. If margins were to improve, even a
defensive stock pick like UNH would have space to grow and vastly increase in
value. UNH differs from other companies through its diversified business
approach within its own sector : through one company, investors effectively
purchase two businesses : the Optum pharmaceutical business and the insurance
business which together form the larger United HealthGroup. Many of the stock's
growth over the past 5 years have been from investor sentiment on this Optum
business : hence, when in Q1 UNH reported strong misses on its Optum subsidiary,
the stock crater. This component of the company provides volatility for the
stock, but it also differentiates the stock from competitors by presenting strong
growth possibilities for potential investors.
One of the stock's most notable benefits is its dividend yield. The stock provides
2.67% of dividends to stockholders, providing steady income an allowing for guaranteed income, given
the stability of the companies earnings and its trustworthiness within the
industry over the past decade. This presents another attractive benefit to
investors and certainly aids in minimizing potential downtrends in the equity.
price
All in all, United HealthGroup is perfect for a defensive hedge pick for
any fundamental investor, and with Warren Buffett's personal seal of approval,
UNH is an undervalued pick which is certainly a buy at this date. If Hemsley's
return does result in a pragmatic rebuilding of the company and its Optum
business booms, the stock could go well above its previous highs of 600$ +. Even
if this does not prove to be true, in an age of fears and concerns over a
potential AI bubble, UNH hedges you portfolio against a recession through
diversification into a defensive and stable industry. While this stock is
certainly worth revisiting in the future, in December 2025, its undervaluation,
institutional buying and new managment makes it a strong buy from our
perspective.
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