UnitedHealth: Deeply oversold but worth a closer look

[encrypted]

UnitedHealth (UNH) is the largest private healthcare company in America. Eight million Medicare Advantage members. Optum’s network reaches tens of millions more. It has the data, the reach, and the pricing power. At today’s valuation, it’s worth adding to your watchlist. Forward P/E at 11× versus a five-year average of 14×. Price-to-sales at 0.6×. RSI at levels not seen in decades. Oversold. Under-owned.

Mispriced? Potentially. We must make it very clear that there could be more downside. But upside is also worth considering.

The AI angle is real. UNH’s health data trove is unmatched. AI can strip billions in waste, automating claims, flagging fraud, predicting costly illnesses before they happen. This isn’t science fiction. It’s execution. Done right, it builds margins and widens the moat. Few can play at this scale. UNH can.

Healthcare as a sector trades 20-30% cheaper than the S&P 500. Aging demographics and chronic care demand are long-term tailwinds. A re-rating here could be swift and brutal for anyone short.

Now, the problems. Medical costs are spiking. Medicare Advantage margins are squeezed. Guidance was pulled, and that spooked the market. Leadership turnover added uncertainty.

These are real headwinds. But they’re fixable.

Premium hikes are already being set for 2026. Stephen Hemsley, the architect of UNH’s prior growth, is back. He’s cutting, reviewing, and bringing in outside talent.

Price implications? The market is pricing in permanent damage. That’s why you can buy a market leader at a crisis multiple. If margins recover and AI efficiencies kick in, this stock doesn’t just bounce, it re-rates. The gap from 11× to 14× earnings on UNH’s scale is tens of billions in market cap.

The bear pit is noisy. The bull case is quiet. But it’s there, and it’s strong. Stop losses are important to manage more downside risk.

The forecasts provided herein are intended for informational purposes only and should not be construed as guarantees of future performance. This is an example only to enhance a consumer's understanding of the strategy being described above and is not to be taken as Blueberry Markets providing personal advice.

[Nahid10]

This is one of the more balanced takes I’ve seen on UNH lately. The valuation argument is compelling — a forward P/E of 11× for a company with this scale, reach, and data advantage really is rare. The AI angle could be transformative too. No other healthcare company has as much patient data + claims data as UNH, and if they execute properly, fraud detection and predictive analytics could save billions while improving outcomes.

I also like that you called out the sector discount. Healthcare as a whole trades at a steep discount to the S&P, even though demographics (aging populations, chronic care demand) clearly point to higher long-term demand. That disconnect feels temporary. If guidance stabilizes and leadership proves margins can recover, this could re-rate very quickly.

[jacson4]

I agree UNH is cheap on a multiples basis, but there are reasons why the market is punishing it. The Medicare Advantage cost spike is real, and those pressures could persist longer than bulls expect. Regulators are already scrutinizing margins in this space, so it’s not guaranteed that premium hikes will offset higher costs.

Leadership turnover also adds uncertainty. Yes, Hemsley is back, but rebuilding confidence in Wall Street takes time. Meanwhile, guidance has been pulled, and when a company this size stops giving visibility, institutional investors usually step aside until clarity returns.

The AI potential is exciting, but execution is everything. Healthcare is notorious for regulatory bottlenecks, data privacy challenges, and integration delays. Betting on AI-driven margin expansion sounds great, but it may not happen as quickly as the market hopes.