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UnitedHealth Group (UNH) tanked as much as 12% on Friday, Feb. 21 following reports that the Department of Justice has launched an investigation into the healthcare services firm.
The DOJ scrutiny is centered on the company’s Medicare billing practices, as per sources that talked to the Wall Street Journal on condition of anonymity. It’s investigating protocols that UNH has in place for recording diagnoses to see if they’re designed to result in unnecessary payments. The allegations suggest that UnitedHealth has been making questionable diagnoses in order increase Medicare Advantage payments, such as through benefiting physician groups that UNH owns.
Following today’s decline, UnitedHealth stock is down nearly 10% in the year to date.
Should You Buy the Dip in UnitedHealth Stock?
Today’s pullback may be an opportunity to load up on UnitedHealth stock, given the insurance behemoth has already dismissed the WSJ report as “misinformation.”
“We’re not aware of the ‘launch’ of any ‘new’ activity,” the company said in a statement, adding “any suggestion that our practices are fraudulent is outrageous and false.”
In fact, the multinational recently received a bullish note in its favor from Cantor Fitzgerald analyst Sarah James that said its shares could soar to $700 over the next 12 months.
James’ price target on UNH shares indicates potential upside of more than 50% from current levels. Even the consensus rating on UnitedHealth Group sits at “Strong Buy” at the time of writing.
UNH Topped Earnings Estimates in its Fiscal Q4
Analysts are positive on UNH’s pending acquisition of Amedisys (AMED) as well. The healthcare stock may be worth buying on today’s weakness because its financials remain strong in the face of challenges, including a continued increase in medical costs and a cyberattack in early 2024.
Minnetonka-headquartered UnitedHealth Group earned $6.81 a share in its fourth quarter – well above $6.71 per share that analysts had called for.
While its revenue missed estimates in Q4, the multinational maintained its full-year guidance at the time, indicating it expects things to pick up through the remainder of 2025.
Finally, UNH is a dividend stock that yields 1.83% at writing, which makes it all the more exciting to own for income investors. Note that UnitedHealth shares have lost over 25% in since early November.
