Say Yes To UnitedHealth Stock?

August 18th, 2025 by Trefis Team
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UNH: UnitedHealth logo
UNH
UnitedHealth

Warren Buffett’s Berkshire Hathaway disclosed a $1.6 billion stake in UnitedHealth Group (NYSE: UNH)  on August 15, 2025, sending shares up 11% in the stock’s best trading day since 2020. The investment marks Buffett’s return to UNH after selling his entire position in 2010, suggesting he sees compelling value at current depressed levels.

UNH now trades at 11 times trailing adjusted earnings, up from the 9 times the low reached earlier this month, but still well below its five-year average of 21 times. While this validates our previous assessment that the stock appears attractively valued, the core operational challenges remain unresolved—medical cost ratios of 89.4%, compressed margins, and earnings guidance slashed from $30 to $16 per share.

White and blue health pill and tablet letter cutout on yellow surface

Pixabay

Surely, Buffett’s endorsement provides psychological support and suggests a potential floor is forming. However, the fundamental issues that drove the stock from $600 to $250 persist. Management indicates no earnings growth until 2026, highlighting the extended recovery timeline ahead.

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For bold traders, the combination of Buffett’s validation and extreme valuation discount may present opportunity. Conservative investors should wait for concrete evidence of medical cost stabilization before entering. UnitedHealth’s scale and diversified Optum business make it likely to emerge stronger eventually, but patience and volatility tolerance remain essential. Also, see – Buy or Fear UNH Stock?

Overall, while Buffett’s $1.6 billion investment provides near-term technical support and validates the value proposition, UNH remains a risky bet at current levels. However, we apply a risk assessment framework while constructing the Trefis High Quality (HQ) Portfolio, which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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