‘Jump the Gun,’ Says Investor About UnitedHealth Stock

UnitedHealth Group (NYSE:UNH) stock has gone off a cliff over the past few months, having lost almost half of its value since mid-April.

The reasons for the shocking fall from grace are well known by now and range from a rare earnings miss – its first since 2008 – to the surprise resignation of its CEO and increased auditing scrutiny of Medicaid Advantage plans.

More regulatory headwinds could be on the horizon, as potential budget cuts to Medicaid – estimated at around $880 billion over the coming decade – would directly impact healthcare providers such as UnitedHealth.

While acknowledging the risks to UnitedHealth’s revenue streams, one investor, known by the pseudonym First Principles Partners, believes the outlook is beginning to improve.

“When I look at these possible outcomes of Medicaid budget cuts, I believe that UnitedHealth Group has a bigger opportunity than a loss,” asserts the 5-star investor.

First Principles Partners’ confidence stems from UnitedHealth’s impressive diversification and proven success in attracting customers across a variety of segments. This includes self-funded commercial benefits, which grew by 700,000 members in Q1 2025, and services for seniors and individuals with “sophisticated needs,” which grew by 545,000 in the same quarter.

“Despite federal healthcare cuts, UnitedHealth is gaining new clients and expanding in self-funded and senior care, reflecting strong demand for its innovative offerings,” the investor emphasizes.

Moreover, despite the bad press of late, the investor believes UnitedHealth has a strong balance sheet. As of Q1, the company held $34 billion in cash and short-term investments, along with an investment portfolio that included over $46 billion in available-for-sale debt securities.

From a valuation standpoint, the recent selloff has pushed UNH into value territory. The stock now trades at a Price-to-Earnings ratio roughly 20% below that of its industry peers. Taking a conservative view on earnings and valuation, First Principles Partners sees potential upside of around 24%. The investor is therefore advising investors to jump the gun before UNH’s share price takes off.

“I think investors should seize this cheap entry point,” sums up First Principles Partners, who rates UNH shares a Buy. (To watch First Principles Partners’ track record, click here)

Wall Street seems to share that conviction. With 18 Buys, 7 Holds, and just 1 Sell, UnitedHealth carries a Moderate Buy consensus rating. The average 12-month price target stands at $368.27, suggesting potential upside of ~22% 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.