UnitedHealth: Take Advantage Of Its Stock’s Recent Drawdown

Summary:

  • UnitedHealth Group’s recent drawdown presents a lucrative investment opportunity to value-seeking investors.
  • The stock’s year-to-date slump is likely due to the financial markets’ recent risk-on appetite and the anticipation that insurance premiums could suffer from softer pricing in 2023.
  • However, we think the stock market will level out in the coming months, subsequently providing support to lower beta securities such as UnitedHealth.
  • Furthermore, UnitedHealth’s substantial market share means it is less susceptible to lower implied insurance prices. Moreover, investors need to remember that the company’s claims aren’t lumpy as it focuses on long-term solutions.
  • Yes, UnitedHealth’s stock price multiples aren’t overly attractive. However, its countercyclical nature could phase out valuation-based risks. In fact, we believe the stock’s realized total returns could sustain into perpetuity.

Two doctors looking at patient data on digital tablet

Solskin

Despite a recent financial market recovery and a comprehensive earnings beat, UnitedHealth Group Incorporated’s (NYSE:UNH) stock finds itself lingering among the year-to-date losers. In our opinion, the market’s low-beta attitude, coupled with the unwanted prospect of softer life & health insurance

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UnitedHealth

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L&H pricing (St. Louis Fed)

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M/M Sector Returns (GuruFocus)


Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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