Does UnitedHealth’s 34% Stock Plunge Reveal a Rare Opportunity in 2025?

• Ever wondered if UnitedHealth Group’s steep stock slide could actually be a rare buying opportunity? If you’re trying to figure out what the real value is behind the headlines, you’re in the right place.
• Despite years of growth, UnitedHealth Group’s stock has dropped sharply, down 10.1% in the last week and 8.2% over the past month, with a staggering 34.4% decline year-to-date and a 40.4% fall over the last year.
• Several recent developments have kept UnitedHealth Group in the news, with increased regulatory scrutiny on managed care and competitive shifts in healthcare services fueling much of the volatility. While some investors read these headlines as increased risk, others are searching for overlooked value as the landscape evolves.
• According to our valuation framework, UnitedHealth Group scores a 5 out of 6 for undervalued checks, putting it among the higher-scoring large caps. Let’s explore how those valuation measures stack up, and stick around for one approach many investors overlook that could offer the clearest signal yet.

Find out why UnitedHealth Group's -40.4% return over the last year is lagging behind its peers.

Approach 1: UnitedHealth Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company’s shares are really worth by projecting its future cash flows and discounting them back to today’s dollars. This approach helps investors look beyond market noise and assess the underlying value based on long-term fundamentals.

For UnitedHealth Group, the DCF uses actual and estimated Free Cash Flow (FCF) to shareholders over time. The company’s latest reported FCF is $17.1 Billion. Analyst forecasts suggest FCF could grow to $27.1 Billion by 2029, with longer-term projections continuing to rise. However, these further years beyond 2029 are less certain and are extrapolated out by Simply Wall St. All cash flows considered are in US dollars, matching UnitedHealth’s financial reporting.

Based on this methodology, the DCF yields an intrinsic value of $854.05 per share. This figure is significantly above recent share prices and implies a 61.3% discount to the calculated fair value. In practical terms, the DCF indicates the stock is deeply undervalued at current levels, which may mean investors are overlooking its long-term potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests UnitedHealth Group is undervalued by 61.3%. Track this in your watchlist or portfolio, or discover 842 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for UnitedHealth Group.

Approach 2: UnitedHealth Group Price vs Earnings

For stable, profitable companies like UnitedHealth Group, the price-to-earnings (PE) ratio is a trusted way to gauge valuation. The PE ratio tells investors how much they are paying for each dollar of the company’s earnings, making it a direct reflection of investor expectations about future growth and risk. Generally, a higher PE ratio is justified for companies with faster earnings growth or lower perceived risks, while slower-growing or riskier companies tend to trade at lower multiples.

Currently, UnitedHealth Group trades at a PE of 17x. This stands below the healthcare industry’s average of 21.5x and well beneath the peer group average of 24.8x. At first glance, this could signal the stock is undervalued compared to similar companies and sector norms. However, benchmark comparisons can miss critical context about the company’s unique growth prospects, profitability, and risks.

This is where Simply Wall St’s Fair Ratio comes in. Unlike simple comparisons, the Fair Ratio, calculated as 41.4x for UnitedHealth Group, adapts to key characteristics like earnings growth, profit margins, industry specifics, company size, and risk profile. This makes it a more tailored and accurate way to assess whether the stock is being fairly priced by the market.

Comparing UnitedHealth Group’s actual PE of 17x to its Fair Ratio of 41.4x suggests the stock is trading well below what would be considered fair value based on its fundamentals and outlook.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1411 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your UnitedHealth Group Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your personal story or perspective on a company, connecting what you believe about its future, such as fair value, expected revenue, earnings, and margins, with a financial forecast and, ultimately, a price you think is fair.

Rather than just crunching numbers, Narratives help you link the company's story to its projected financial outlook, turning complex data into actionable insights. On Simply Wall St’s Community page, millions of investors use Narratives as an approachable tool to capture their views and see how they stack up against others in real time.

With Narratives, you can quickly see when a stock might be a buy or sell by comparing your fair value to its current price, and since they update dynamically when news or earnings are released, your view can stay current. For example, some UnitedHealth Group investors may build a bullish Narrative around technology investments and margin recovery, which leads to a high fair value. Others may focus on regulatory risks and see a lower fair value instead.

Do you think there's more to the story for UnitedHealth Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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