Buffett's Shot in the Arm Sends UnitedHealth Soaring Against the Odds

Shares of UnitedHealth Group Incorporated UNH jumped nearly 12% last Friday after Warren Buffett's Berkshire Hathaway Inc. (BRK.B) revealed that it had snapped up a significant number of shares of the troubled health insurer. As of June 30, 2025, Berkshire had amassed more than 5 million UNH shares, a stake worth roughly $1.57 billion.

The disclosure came despite Berkshire maintaining its broader net-seller stance, marking the 11th consecutive quarter in which it sold more than it bought. That contrast underscores the significance of this investment: a classic Buffett-style contrarian bet on long-term value. When Buffett takes a stake, it sends a powerful message that he sees enduring potential, sparking a wave of copycat buying from both institutional and retail investors.

Berkshire pared back holdings in Apple, banks and telecom stocks, redirecting capital toward healthcare and infrastructure, a move that suggests a deliberate rotation into more defensive and cash-rich sectors.

For UnitedHealth, the timing is particularly notable. The company has faced a string of challenges over the past year, including a major cyberattack, the tragic killing of a senior executive, rising medical costs, two straight quarters of underwhelming earnings, a leadership shakeup and ongoing regulatory probes. Buffett’s entry signals that these issues may prove to be temporary, helping fuel the sharp rebound.

Moreover, peers such as Centene Corporation CNC and Elevance Health, Inc. ELV rose 5.8% and 4.8% last Friday, respectively, while both had cut their 2025 guidance on higher medical cost trends. This reflects investor belief that Berkshire’s move represents a potential re-rating of the sector as a whole.

Centene lowered its 2025 adjusted EPS guidance to $1.75 from the previous view of $7.25. It now expects the HBR to rise to 93.5% in the 2H 2025, a significant deterioration from the year-ago level of 89.4%. However, Centene expects its premium and service revenues to increase to around $172 billion.

Elevance now expects adjusted EPS for 2025 to be $30, lower than the previously forecasted range of $34.15-$34.85. It anticipates the benefit expense ratio to jump to 90% in 2025, up from the 2024 level of 88.5%. However, Elevance expects full-year operating cash flow at around $6 billion, up from the year-ago level of $5.8 billion.

UnitedHealth’s Price Performance, Valuation and Estimates

Shares of UNH have lost 39.9% in the year-to-date period compared with the industry’s decline of 32.1%.

From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 17.48, up from the industry average of 14.55. UNH carries a Value Score of B.

The Zacks Consensus Estimate for UnitedHealth’s 2025 earnings is pegged at $16.58 per share, implying a 40.1% drop from the year-ago period.

The stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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