UnitedHealth Shares Surge Nearly 14% on Warren Buffett Investment
UnitedHealth Group shares jumped 13.9% on Friday after billionaire investor Warren Buffett’s Berkshire Hathaway revealed it had purchased 5 million shares of the healthcare giant. The move boosted investor confidence in the company’s recovery under its new CEO.
UnitedHealth stock had lost almost half its value in the past year due to rising healthcare costs and changes to government reimbursement plans. These challenges weighed heavily on its health insurance and Optum patient care divisions.
Buffett’s investment, along with buying activity from other major hedge funds, suggests confidence that the stock is undervalued relative to its long-term potential. However, analysts warn that recovery may be slow, as the company faces billions in additional medical costs over the next few quarters.
Two analysts noted that the next 18 months will be challenging for UnitedHealth due to higher medical service usage and falling enrollment in government-backed plans.
James Harlow, senior vice president at Novare Capital Management, called Buffett’s move a “vote of confidence” but said management must rebuild trust and credibility with investors and regain its history of consistently beating earnings expectations.
UnitedHealth has missed Wall Street’s earnings targets for two consecutive quarters in 2025. In May, it withdrew its 2025 guidance, reinstating it last month with a profit forecast well below analysts’ expectations.
Currently, the stock trades at 16.75 times forward earnings estimates, compared to 10.51 for peer CVS Health. Shares have fallen nearly 40% in 2025, making UnitedHealth the worst-performing Dow Jones stock this year.
Friday’s rally pushed UnitedHealth shares to $309.14, their best single-day gain since October 2008, helping the Dow Jones Industrial Average reach an all-time intraday high. Rival insurers Humana, Elevance Health, and CVS Health also saw modest gains.
Jeff Jonas, portfolio manager at Gabelli Funds, said the sharp move shows “how beaten down and out of favor the stock and the entire health insurance sector is.”
Over the last two years, UnitedHealth has faced multiple crises — a cyberattack on its technology unit, the murder of its insurance chief, and a federal probe into its government-backed plans. In May, CEO Andrew Witty resigned, with former CEO Stephen Hemsley returning to lead the company.
Buffett’s Strategic Bet
Buffett is known for investing in companies facing short-term trouble but offering long-term value. Past examples include Occidental Petroleum in 2019 and Goldman Sachs during the 2008 financial crisis.
Kevin Gade, COO at Bahl & Gaynor, said Buffett’s purchase offers “psychological reassurance” to investors wary of UnitedHealth after months of turbulence.
According to an SEC filing, Berkshire owned 5.04 million UnitedHealth shares worth $1.57 billion as of June 30. Buffett had previously held UnitedHealth shares between 2006 and 2009 before selling in 2010.
Other big hedge funds — including David Tepper’s Appaloosa Management, Lone Pine Capital, and Two Sigma Investments — also disclosed purchases of UnitedHealth shares in recent filings.
