UnitedHealth has gotten torched over the last six months - since March 2025, its stock price has dropped 26.4% to $353.93 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Following the pullback, is this a buying opportunity for UNH? Find out in our full research report, it’s free.
Why Is UNH a Good Business?
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
1. Economies of Scale Give It Negotiating Leverage with Suppliers
Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.
With $422.8 billion in revenue over the past 12 months, UnitedHealth is one of the most scaled enterprises in healthcare. This is particularly important because health insurance providers companies are volume-driven businesses due to their low margins.
2. Wall Street Expects Impressive Revenue Gains
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite, though some deceleration is natural as businesses become larger.
Over the next 12 months, sell-side analysts expect UnitedHealth’s revenue to rise by 8.4%. While this projection is slightly below its 10.1% annualized growth rate for the past two years, it is particularly noteworthy for a company of its scale and suggests the market is baking in success for its products and services.
3. Stellar ROIC Showcases Lucrative Growth Opportunities
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
UnitedHealth’s five-year average ROIC was 20.5%, beating other healthcare companies by a wide margin. This illustrates its management team’s ability to invest in attractive growth opportunities and produce tangible results for shareholders.
Final Judgment
These are just a few reasons why we think UnitedHealth is a high-quality business. With the recent decline, the stock trades at 16.4× forward P/E (or $353.93 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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