Does UnitedHealth’s Recent 3.5% Rebound Signal a Long-Term Opportunity in 2025?

• If you have ever wondered whether UnitedHealth Group stock is truly a bargain right now, you are not alone and you are in the right place.
• Even after climbing 3.5% in the last week, UnitedHealth Group shares have fallen 32.8% year-to-date and are down a striking 42.8% over the past twelve months.
• The recent rebound comes in the wake of industry headlines, such as regulatory updates impacting managed care providers and notable leadership changes. These developments have shifted both sentiment and short-term expectations around the stock. As news continues to shape the narrative, many investors are trying to gauge what these developments actually mean for UnitedHealth’s long-term value.
• On our own value assessment, UnitedHealth Group scores 5 out of 6 on the valuation scorecard, suggesting it looks undervalued on most methods we check. Let’s break down those approaches. Be sure to read to the end for an even better way to make sense of value.

Find out why UnitedHealth Group's -42.8% 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 a company's intrinsic value by projecting its future free cash flows and discounting them back to today's dollars. This helps investors understand what the entire business could be worth now, based on its expected ability to generate cash over the coming years.

For UnitedHealth Group, current Free Cash Flow is approximately $17.1 Billion. Analysts forecast consistent growth, and by 2029, cash flow is projected to reach $27.1 Billion. It is important to note that while analysts provide estimates for the next five years, longer-term projections are extrapolated by Simply Wall St, so uncertainty increases further out.

Using a 2 Stage Free Cash Flow to Equity model, the DCF model calculates an estimated fair value for UnitedHealth Group of $847.11 per share. This suggests the stock is trading at a 60.0% discount to its intrinsic value.

Based on this analysis, UnitedHealth Group appears deeply undervalued based on its future cash flow potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests UnitedHealth Group is undervalued by 60.0%. Track this in your watchlist or portfolio, or discover 878 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 (PE)

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies, as it allows investors to gauge how much they are paying for each dollar of a company’s earnings. For businesses like UnitedHealth Group, which have a strong track record of profitability and consistent earnings, the PE ratio offers a straightforward window into current market expectations.

Determining what an appropriate or “fair” PE ratio should be depends on factors such as the company’s projected earnings growth and the perceived risks around its future performance. Higher growth prospects and lower risk profiles tend to warrant a higher PE multiple. In contrast, companies with slower expected growth or more uncertainty typically trade at lower multiples.

Right now, UnitedHealth Group’s PE ratio stands at 17.5x. This is noticeably lower than both the Healthcare industry average of 22.0x and the average among peers, which is 25.8x. However, comparison with peers and industry averages can sometimes be misleading due to differences in size, margins, and risk profiles.

This is where Simply Wall St's proprietary “Fair Ratio” comes in. The Fair Ratio refines the valuation comparison by considering specific factors like UnitedHealth’s earnings growth outlook, its profit margins, industry trends, and its large market capitalization. This tailored approach accounts for nuances that raw peer or industry comparisons might overlook, providing a more accurate benchmark for whether the current share price makes sense.

Simply Wall St’s Fair Ratio for UnitedHealth Group is 41.4x, over twice the stock’s current PE. When comparing UnitedHealth’s actual PE with its Fair Ratio, the sizable gap suggests the stock is undervalued on this measure as well.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1404 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your UnitedHealth Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story about a company. It is how you connect your view of UnitedHealth Group’s prospects with real financial numbers, including your own assumptions for future revenue, earnings, and profit margins, to calculate what you believe is a fair value today.

Unlike traditional metrics, Narratives link the company’s latest developments, opportunities, and challenges directly to your financial forecast and a current fair value, helping you see how the story behind the numbers drives the investment case. Narratives are free, accessible, and simple to use on Simply Wall St’s Community page, which hosts millions of investors sharing perspectives.

You can use Narratives to decide when to buy or sell UnitedHealth Group by comparing your Fair Value to the current Price, and the platform automatically updates your figures as fresh news, earnings, or regulatory changes happen. For example, some investors expect margin recovery and forecast a fair value as high as $626.0 per share, while others focus on earnings risk and see fair value as low as $198.0. Narratives help you clarify which story fits your own view and inform your next decision.

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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