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This Is Why UnitedHealth Stock Bounced Back, But Is Better to Avoid
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UnitedHealth Group Incorporated (UNH - Free Report) missed first-quarter earnings expectations, withdrew full-year guidance, and faces legal challenges. However, Insider confidence has lately improved share performance. So, shall we consider investing in the UnitedHealth stock, given recent positive developments? Let’s see –
Why Did UnitedHealth Stock Jump Yesterday?
On Monday, UnitedHealth Group’s shares rose 8.2% to close at $315.89, following a 23% decline last week. In yesterday’s trading session, UnitedHealth stock was the top gainer on both the S&P 500 and the 30-stock Dow Jones Industrial Average.
UnitedHealth’s CEO, Stephen Hemsley, along with four other insiders, purchased shares of the struggling healthcare insurance giant, boosting its stock. On Friday, Hemsley bought $25 million worth of UnitedHealth stock, acquiring 86,700 shares at an average price of $288.57 per share, according to the SEC Form 4 filing. Before this transaction, Hemsley held roughly 1.2 million shares of UNH.
UnitedHealth’s CFO, John Rex, purchased around $5 million of the company’s stock, equal to 17,175 shares, at an average price of $291.11. Timothy Flynn, John Noseworthy, and Kristen Gil, all current directors at UnitedHealth Group, also bought shares.
What Plagued UnitedHealth Stock This Year?
UnitedHealth Group is being investigated by the U.S. Department of Justice (DOJ) for potential Medicare Advantage billing fraud. UnitedHealth is known for providing Medicare Advantage to the elderly. However, the company’s finances suffered due to higher-than-expected costs of new Medicare Advantage participants.
UnitedHealth’s business model, in itself, is under pressure after management suspended its 2025 outlook. Hemsley resumed his previous role as CEO, held from 2006 to 2017. CEO Andrew Witty stepped down for personal reasons.
Anyhow, UnitedHealth’s operating expenses rose 9.4% year over year in the first quarter of 2025 and are showing no signs of decreasing. This may put pressure on the company’s margins in the coming days. UnitedHealth is also dealing with high interest expenses and continued to carry a debt burden of $71.3 billion as of March 31, 2025.
All these factors have negatively impacted UnitedHealth’s stock, which is down 37.9% this year. On the contrary, its top peers, including Centene Corporation (CNC - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) , have seen their shares gain 1.6% and 11.8%, respectively, year to date.
Here’s How to Trade UNH Stock Now
No doubt, the directors’ purchasing shares of UnitedHealth may indicate that they are confident about the company’s well-being. Insider buying indicates a belief in the company resolving its issues promptly. However, the challenges facing UnitedHealth, such as regulatory scrutiny and cost pressures, may impact its business model for some time. Investors should exercise caution about investing in UnitedHealth stock currently.
Moreover, the UnitedHealth stock is at the moment trading below both the short-term 50-day moving average (DMA) and long-term 200-DMA, indicating a bearish trend. This suggests that it’s wise to avoid investing in UNH stock for now.
Image: Bigstock
This Is Why UnitedHealth Stock Bounced Back, But Is Better to Avoid
UnitedHealth Group Incorporated (UNH - Free Report) missed first-quarter earnings expectations, withdrew full-year guidance, and faces legal challenges. However, Insider confidence has lately improved share performance. So, shall we consider investing in the UnitedHealth stock, given recent positive developments? Let’s see –
Why Did UnitedHealth Stock Jump Yesterday?
On Monday, UnitedHealth Group’s shares rose 8.2% to close at $315.89, following a 23% decline last week. In yesterday’s trading session, UnitedHealth stock was the top gainer on both the S&P 500 and the 30-stock Dow Jones Industrial Average.
UnitedHealth’s CEO, Stephen Hemsley, along with four other insiders, purchased shares of the struggling healthcare insurance giant, boosting its stock. On Friday, Hemsley bought $25 million worth of UnitedHealth stock, acquiring 86,700 shares at an average price of $288.57 per share, according to the SEC Form 4 filing. Before this transaction, Hemsley held roughly 1.2 million shares of UNH.
UnitedHealth’s CFO, John Rex, purchased around $5 million of the company’s stock, equal to 17,175 shares, at an average price of $291.11. Timothy Flynn, John Noseworthy, and Kristen Gil, all current directors at UnitedHealth Group, also bought shares.
What Plagued UnitedHealth Stock This Year?
UnitedHealth Group is being investigated by the U.S. Department of Justice (DOJ) for potential Medicare Advantage billing fraud. UnitedHealth is known for providing Medicare Advantage to the elderly. However, the company’s finances suffered due to higher-than-expected costs of new Medicare Advantage participants.
UnitedHealth’s business model, in itself, is under pressure after management suspended its 2025 outlook. Hemsley resumed his previous role as CEO, held from 2006 to 2017. CEO Andrew Witty stepped down for personal reasons.
Anyhow, UnitedHealth’s operating expenses rose 9.4% year over year in the first quarter of 2025 and are showing no signs of decreasing. This may put pressure on the company’s margins in the coming days. UnitedHealth is also dealing with high interest expenses and continued to carry a debt burden of $71.3 billion as of March 31, 2025.
All these factors have negatively impacted UnitedHealth’s stock, which is down 37.9% this year. On the contrary, its top peers, including Centene Corporation (CNC - Free Report) and Molina Healthcare, Inc. (MOH - Free Report) , have seen their shares gain 1.6% and 11.8%, respectively, year to date.
Here’s How to Trade UNH Stock Now
No doubt, the directors’ purchasing shares of UnitedHealth may indicate that they are confident about the company’s well-being. Insider buying indicates a belief in the company resolving its issues promptly. However, the challenges facing UnitedHealth, such as regulatory scrutiny and cost pressures, may impact its business model for some time. Investors should exercise caution about investing in UnitedHealth stock currently.
Moreover, the UnitedHealth stock is at the moment trading below both the short-term 50-day moving average (DMA) and long-term 200-DMA, indicating a bearish trend. This suggests that it’s wise to avoid investing in UNH stock for now.
Image Source: Zacks Investment Research
Presently, UnitedHealth stock has a Zacks Rank #4 (Sell), and the Zacks Consensus Estimate of $23.70 for UNH’s earnings per share (EPS) is down by 23.3% from a year ago. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Image Source: Zacks Investment Research