Will UNH Stock Rebound?

Core Viewpoint - UnitedHealth Group has experienced a significant stock decline, with a 5.71% drop on May 21, 2025, bringing its stock price to $302.98, marking a 42% decrease year-to-date and 43% over the last 12 months, primarily due to disappointing Q1 results and reduced full-year guidance [1][9] Peer Comparison - Compared to competitors, UnitedHealth's decline is notable; Cigna increased by 4% in 2025 and 5.8% over the previous year, while Molina Healthcare saw a 2.4% year-to-date increase. Humana, like UnitedHealth, faced a drop of over 45% due to Medicare Advantage pressures [2] Valuation - UnitedHealth is trading at a price-to-sales ratio of 0.7, a price-to-earnings ratio of 12.4, and a price-to-free cash flow ratio of 9.6, all significantly lower than the S&P 500 averages, indicating a potential entry opportunity for long-term investors [3] Growth - The company has shown solid revenue growth, with an average annual growth rate of 11.3% over the last three years and a recent revenue increase of 8.1% from $372 billion to $400 billion [4] Profitability - UnitedHealth's profitability is a concern, with an operating income of $33 billion and a net margin of 5.4%, indicating inefficiencies in converting revenue into profit [5] Financial Stability - The balance sheet remains robust, with $81 billion in debt against a market capitalization of $378 billion, resulting in a moderate debt-to-equity ratio of 29.6% and strong liquidity with $29 billion in cash [6] Downturn Resilience - Historically, UnitedHealth has shown resilience during market downturns, with less severe declines compared to the S&P 500 during crises, indicating its capability to recover from systemic shocks [8] Conclusion - Despite legitimate concerns regarding stock decline and profitability, ongoing revenue growth, a solid balance sheet, and historical resilience suggest that the selloff may be excessive, presenting a compelling recovery narrative for long-term investors [9]