What Happened?
Shares of health insurance company UnitedHealth (NYSE:UNH) jumped 4.7% in the morning session after the company provided a positive update on its Medicare Advantage business and reaffirmed its full-year 2025 earnings guidance. In a regulatory filing, the health insurance giant announced that based on a preliminary review, it expects approximately 78% of its Medicare Advantage members to be enrolled in plans rated four stars or higher. This rating is crucial because plans that achieve this threshold in the government's Star Rating system qualify for valuable bonus payments, which can directly boost the company's revenue. The news provides investors with increased confidence in a key segment of UnitedHealth's business. In addition to the promising Medicare outlook, the company also confirmed it would maintain its previously issued adjusted earnings per share forecast for 2025, signaling stability in its financial projections.
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What Is The Market Telling Us
UnitedHealth’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 3% on the news that investors took some profits off the table as markets awaited signals on future monetary policy from the Federal Reserve's Jackson Hole symposium later in the week. The downturn in the market was largely attributed to a significant sell-off in megacap tech and chipmaker shares. Nvidia, Advanced Micro Devices (AMD), and Broadcom all saw notable drops, dragging down the VanEck Semiconductor ETF. Other major tech-related companies like Tesla, Meta Platforms, and Netflix were also under pressure. A key reason for this trend is that much of the recent market gains have been concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
UnitedHealth is down 32.4% since the beginning of the year, and at $340.81 per share, it is trading 45.5% below its 52-week high of $625.25 from November 2024. Investors who bought $1,000 worth of UnitedHealth’s shares 5 years ago would now be looking at an investment worth $1,092.
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