UnitedHealth (NYSE:UNH) stock is getting a dose of realism, as management has taken the crucial first step in solving any problem – acknowledging it exists. That reality check came in its Q2 2025 earnings release, where the company admitted it had underestimated medical costs by $6.5 billion and outlined a range of actions to address the shortfall.
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While the hit to margins is significant, UnitedHealth remains firmly profitable, and its Q2 revenue of $111.6 billion still came in $31 million ahead of Wall Street’s estimates.
Even so, that better-than-expected revenue couldn’t offset other disappointments in the report, including a Normalized EPS of $4.08, $0.37 below consensus, and a full-year EPS forecast of $16, about half the target set last December.
The disappointing outlook has kept pressure on the stock, which is down more than 50% since mid-April, though it has found some tentative footing in recent trading sessions.
That pullback has caught the attention of top investor James Foord, who sees an opening to buy at bargain prices.
“With Q2 earnings now behind us and clear guidance, the worst is now likely priced in,” explains Foord, who is among the top 2% of TipRanks’ stock pros. The investor points to UnitedHealth’s entrenched position as the largest U.S. managed care provider and its 13% year-over-year Q2 revenue growth across a broad mix of insurance products and services.
Foord is also encouraged by management’s decisive response to the earnings miss – from repricing Medicare Advantage plans to exiting unprofitable PPOs and tightening provider contracts. Even under a bearish scenario, the investor estimates the stock should trade about 30% above current levels. While he concedes that the earlier selloff was “totally warranted,” he believes the tide has turned.
That optimism is shared by others. Over the past three months, insiders have scooped up more than 114,000 shares, while heavyweight investors such as Chris Davis and Sanders Capital each added roughly one million. To Foord, this wave of high-conviction buying underscores that those closest to the company, and some of its most seasoned backers, view the current weakness as an attractive entry point.
“UNH is not going anywhere, and it will continue to print cash for years to come,” Foord concludes, assigning the stock a Strong Buy rating. (To watch Foord’s track record, click here)
Wall Street largely shares that optimism: of 24 recent analyst reviews, 18 recommend Buy, 4 are Holds, and only 2 are Sells, making for a Moderate Buy consensus. The average 12-month price target stands at $312.65, suggesting upside of ~20% from current levels. (See UNH stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.