Mizuho's Jared Holz talks UnitedHealth dropping on DOJ probe

UnitedHealth Group (UNH) Investigation & Outlook - UnitedHealth proactively reached out to the Department of Justice (DOJ) to inquire about potential probes [1] - The company claims it was unaware of any official communication regarding investigations prior to the Wall Street Journal article [2] - Investors generally anticipated some behind-the-scenes activity [3] Investment Strategy & Valuation - A long-term investment philosophy is crucial, with potential for improvement beyond 2026 [4] - Pre-COVID, the stock traded at 13 times earnings, considered historically low; currently, it's around 11 times earnings [4] - Earnings per share (EPS) is projected to be below $20 for the current year and slightly above $20 for the next year [5] - Based on EPS estimates of $18-$20 for the current year and low $20s for the next year, the stock trades at a 15-17 times multiple, which may not appear cheap to investors [6] Healthcare Sector Dynamics - The primary concern revolves around the drivers behind higher healthcare utilization rates [7] - The specific factors driving increased utilization are unclear, potentially including cancer treatments or pharmaceuticals [7] - Increased utilization initially impacted commercial sectors, and now affects Medicare and Medicaid [8][9] - While certain healthcare subsectors like tools and CROs (e g Medpace, Icon, Thermo Fisher) have shown positive movement, managed care and large-cap pharma need to outperform for overall healthcare sector momentum [9][10]