UnitedHealth shares have delivered a remarkable performance, surging 5.8% across just two trading sessions. The healthcare giant’s stock climbed from $321 to $340, powered predominantly by retail investors who had maintained cautious or negative outlooks for weeks. This dramatic sentiment shift raises important questions about what drove the change and whether the company can substantiate the renewed optimism.
Institutional Confidence Bolsters Investor Sentiment
The retail investor turnaround coincides with substantial institutional positioning. Prominent investor David Tepper dramatically increased his stake through Appaloosa Management, expanding his holdings from approximately 180,000 shares in the first quarter to 2.45 million shares in the second quarter of 2025—representing growth exceeding 1,300%. This strategic move established UnitedHealth as Tepper’s second-largest portfolio position, valued at roughly $764 million.
This substantial accumulation occurred as the stock had retreated significantly from its peak above $600 to levels sometimes dipping below $250. Warren Buffett has similarly demonstrated contrarian positioning toward the company. Among Wall Street analysts covering UnitedHealth, 67% of the 27 researchers maintain buy recommendations. The average price target stands at $385, suggesting potential upside of approximately 13% from current trading levels.
Online Discussion Sparks Reassessment
The catalyst for shifting perspectives emerged unexpectedly from a Reddit conversation within the r/stocks forum. A post titled “Are health insurance stocks permanently damaged?” ignited vigorous debate, generating 91 comments. Rather than reinforcing selling arguments, the discussion highlighted three compelling factors that prompted many investors to reconsider their stance.
Should investors sell immediately? Or is it worth buying Unitedhealth?
First, premium increases ranging between 20% and 30% are generating substantial revenue inflows. The UnitedHealthcare segment expanded 16% year-over-year despite facing elevated medical costs. As one Reddit participant noted, “My premiums increased 20 to 30 percent this year. That means more revenue is flowing to the insurers.”
Second, management raised its 2025 earnings guidance to at least $16.25 per share while signaling “accelerated growth for 2026.” This forward-looking statement provided significant relief to previously battered investor sentiment.
Regulatory Challenges and Operational Headwinds Persist
Despite the positive momentum, UnitedHealth continues to face substantial challenges. The U.S. Department of Justice is conducting both civil and criminal investigations into the company’s Medicare billing practices, creating ongoing uncertainty. Additionally, the Medical Care Ratio climbed to 89.9% in the third quarter, representing a notable increase from 85.2% during the same period last year.
Operating profits contracted significantly, declining 50% to $4.3 billion. The crucial question remains whether UnitedHealth can effectively translate premium increases into sustainable margin recovery, or if the recent price surge merely represents a technical rebound within a broader downward trend. The $340 price level will serve as a key indicator of whether a genuine trend reversal is underway.
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