Keith Speights, The Motley Fool
5 min read
In This Article:
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UnitedHealth Group stock has plunged more than 50% because of several issues.
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Previous instances when the healthcare stock fell 50% or more presented great buying opportunities.
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This time could be different, but probably not.
Blue chip stocks possess several important attributes. The businesses behind the stocks are large and financially strong and usually leaders in their markets. They also have a reputation for dependability.
Thanks to those characteristics, you won't have many chances to buy blue chip stocks at steep discounts. They're typically too stable and steady. Every once in a while, though, one of these stocks will stumble. Investors currently have a once-in-a-decade opportunity to buy and hold a blue chip stock that's down roughly 50% below its previous high.
What is this rare investment opportunity? UnitedHealth Group (NYSE: UNH), an unquestionably blue chip stock.
UnitedHealth Group ranks as the largest health insurer in the U.S. and is one of the largest companies in the entire healthcare sector based on market cap. The company's Optum Rx unit is the third-largest pharmacy benefits manager (PBM).
UnitedHealth Group generally reports strong revenue and profits quarter after quarter. Over the last 10 years, its trailing-12-month revenue has soared by roughly 260%. The company's trailing-12-month earnings have nearly tripled during the period.
But UnitedHealth Group is now a beaten-down blue chip stock. Its share price has plunged around 50% below the peak set in the fourth quarter of 2024. Multiple factors explain this steep sell-off.
The company suspended its full-year 2025 guidance, mainly because of higher-than-anticipated Medicare Advantage costs, and its former CEO Andrew Witty unexpectedly stepped down. The Wall Street Journal reported that the U.S. Department of Justice has launched a criminal investigation into UnitedHealth Group for potential Medicare fraud.
President Trump announced his intention to curtail PBMs and "cut out the middleman." Nearly everything that could go wrong for UnitedHealth Group has gone wrong.
Is UnitedHealth Group's massive meltdown really a once-in-a-decade opportunity? Actually, it's more like a once-every-15-years opportunity.
The last time the health insurance stock fell by 50% or more was a slump that began in early 2006 and accelerated during the financial crisis of 2008 and 2009. UnitedHealth Group's stock also plunged by 50% or more in 1992 through 1993.
