Insider Buying and Options Surge Spark Bullish Interest in UnitedHealth (UNH)

UnitedHealth Group (UNH) is drawing attention from traders after a spike in call option activity and notable insider buying. Despite the stock being down nearly 40% year-to-date, a weaker-than-expected Q1 earnings report, and a softer outlook, recent activity suggests growing confidence in a potential recovery.

Heightened Activity Signals Bullish Sentiment

On Thursday, more than 162,000 call options were traded on UNH. That’s a 29% jump compared to the stock’s typical daily call volume of around 126,000. This level of activity often reflects bullish expectations from traders anticipating upward price movement.

Insiders are also showing conviction. On May 14, Director John H. Noseworthy purchased 300 shares at an average price of $312.16. Six days later, CEO Stephen Hemsley bought 86,700 shares at an average of $288.57 per share, totaling over $25 million. In total, insiders have acquired 109,408 shares over the past 90 days, worth approximately $31.6 million. Insider buying of this scale often signals confidence in long-term value.

Institutional investors have also been increasing their exposure to these assets. Vanguard, Wellington Management, and Norges Bank all added to their positions last quarter. Institutional ownership now stands at 87.9%, highlighting continued support from long-term holders.

Stock Rebounds Slightly as Fundamentals Show Mixed Signals

The stock closed Friday at $303.22, up 2.49% on the day. It remains far below its 52-week high of $630.73 and just above the recent low of $248.88. At current levels, UNH has a market cap of about $275 billion, a P/E ratio of 14.11, and a dividend yield of 2.84%. The company recently raised its quarterly dividend to $2.21 per share.

UnitedHealth posted Q1 revenue of $109.6 billion, slightly below consensus estimates. Earnings per share came in at $7.20, missing expectations of $7.29. While analysts still expect full-year EPS of $29.54, several firms have lowered their price targets in response to the softer results and rising sector concerns.

Options market data reinforces the bullish tilt. The put/call ratio is 0.48, indicating more call buying than put buying. This ratio suggests traders are positioning for a potential rebound in the near term.

In summary, while UnitedHealth continues to face pressure from weaker earnings and macroeconomic headwinds, the surge in call option activity, insider buying, and strong institutional support indicate renewed investor interest.

Is UNH a Good Stock to Buy Right Now?

According to The Street’s analysts, UnitedHealth is a Moderate Buy. The average UNH price target is $369.73, implying a 21.93% upside.

See more UNH analyst ratings