UnitedHealth Shares Lag Behind Dow Jones Peers Amid Sector Headwinds

As 2025 draws to a close, UnitedHealth Group finds itself in an unenviable position: the worst-performing component of the Dow Jones Industrial Average. The healthcare giant's stock has plummeted more than 30% since the start of the year, creating a stark divergence in market performance. This steep decline has prompted significant moves from major institutional players, leaving investors to ponder whether the stock represents a dangerous falling knife or a rare value opportunity.

Multiple converging pressures explain the stock's significant underperformance. The insurance conglomerate is grappling with unexpectedly high medical costs, which are compressing profit margins. Particular concern surrounds its critical Medicare Advantage business segment. Compounding these operational challenges is intensified regulatory oversight. An ongoing probe by the U.S. Department of Justice (DOJ), alongside external audits of its Medicare and Optum Rx divisions, has cast a shadow over the company.

In a direct response to these examinations, UnitedHealth's leadership has unveiled a detailed 23-point corrective plan. The strategy aims to rebuild confidence among both regulators and the market through enhanced transparency and increased automation.

Analyst Forecasts Paint a Mixed Fundamental Picture

A review of the company's fundamentals reveals a contradictory outlook. Analysts are anticipating the quarterly results, scheduled for release on January 27, 2026, to show revenue growth of approximately 12%. However, this top-line expansion is expected to be overshadowed by a severe contraction in profitability. Estimates point to a dramatic drop of nearly 70% in earnings per share compared to the same quarter last year.

Should investors sell immediately? Or is it worth buying Unitedhealth?

Despite the substantial share price decline, the equity is not trading at a bargain valuation. With a forward price-to-earnings ratio still above 20, UnitedHealth commands a notable premium compared to the industry average, which stands around 13.6.

Institutional Investors Send Conflicting Signals

The activity of sophisticated investors during this downturn has been noteworthy. While certain funds, including Burney Co., trimmed their holdings in the third quarter, others viewed the weakness as a buying opportunity. Most notably, Berkshire Hathaway established a new position valued at roughly $1.57 billion during the second quarter. Analyst sentiment remains cautiously optimistic despite the headwinds, with the average price target suggesting an upside potential of close to 18%.

The pressure is now on returning CEO Stephen Hemsley. His strategic response focuses on pricing adjustments designed to restore profitability in 2026. The effectiveness and timing of these measures will be put to the test when the company reports its figures at the end of January.