There is little joy in Mudville as UnitedHealth Group (NYSE:UNH) delivered more bad news for investors.
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In a surprise announcement, CEO Andrew Witty – who helmed the company since 2021 – will be stepping down for “personal reasons.” Adding a double-whammy, the company also suspended its 2025 guidance, citing an increasing number of insurance claims and the higher-than-expected medical costs of new Medicare Advantage beneficiaries.
This followed a big-time earnings miss last month, with the company falling short of both top- and bottom-line estimates. This was the first such miss for UnitedHealth since 2008, and the market has been punishing the company ever since. UNH’s share price has lost some 45% of its value over the past month.
Addressing the elephant in the room, newly-appointed CEO Stephen Hemsley, who previously served as UnitedHealth’s leader between 2006-2017, pledged to meet the company’s long-term growth target of 13% to 16%. The company now expects to return to growth in 2026.
Could this dip be an opportunity to scoop up UNH at a discount – or should investors stay away from a falling knife?
Calling the recent developments a “major fumble,” one top investor known by the pseudonym Quad 7 Capital thinks the bottom could be fast approaching.
“Buy low, sell high. Stocks make bottoms on horrific news, not good news. We think this news qualifies as horrific,” notes the 5-star investor, who sits in the top 2% of TipRanks’ stock pros.
Quad 7 further details that pulling guidance mere weeks after its issuance is a bad sign indeed. The big question, however, is whether the company will succeed in pulling itself together. The investor thinks UNH will right the ship, making the necessary fixes required to return to their long-term growth targets.
“What we have is a blue chip that has poorly executed, in rare fashion, providing a valuation reset,” states Quad 7 plainly. The investor is rating UNH a Buy. (To watch Quad 7 Capital’s track record, click here)
Wall Street also continues to have faith in UNH. As a case in point, six analysts reiterated their Buy ratings for UNH yesterday. All told, the company has 22 Buy ratings to go along with 3 Holds, giving UNH a Strong Buy consensus rating. Its 12-month price target of $559.13 has an upside just shy of 80%. (See UNH stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.