UnitedHealth Stock Is Rising Monday: What's Going On?

UnitedHealth Group Inc UNH shares are trading higher Monday. The stock appears to be seeing a bit of a relief bounce following a sharp selloff last week. Here’s a look at what’s going on.

What To Know: UnitedHealth stock has been under pressure for most of the year, with shares down approximately 42% year-to-date. The selloff accelerated in April after UnitedHealth posted weak first-quarter results that missed analyst estimates on the top and bottom lines.

The health insurer reported first-quarter revenue of $109.58 billion, missing estimates of $111.6 billion, and adjusted earnings of $7.20 per share, which came in below estimates of $7.29 per share. United Health also cut its full-year earnings guidance, citing higher-than-expected medical costs in its Medicare Advantage business.

“UnitedHealth Group grew to serve more people more comprehensively but did not perform up to our expectations, and we are aggressively addressing those challenges to position us well for the years ahead,” the company said.

The stock selloff was exacerbated last week following the sudden departure of CEO Andrew Witty. The company also suspended its full-year guidance on continued medical cost pressures.

U.S. President Donald Trump issued an executive order last week in an effort to lower drug prices, specifically targeting pharmacy benefit managers (PBMs). These so-called drug “middlemen” have faced scrutiny for years for their role in the industry.

Several analysts lowered price targets following the news with BofA Securities cutting its target to $350 and downgrading shares to Neutral. Morgan Stanley also lowered its price target to $374 and Wells Fargo cut its target to $351. Multiple other firms came out with similar price target cuts in reaction to the news.

Check This Out: Trump’s Drug Price Order Hits PBMs Hardest: CVS, Cigna, UNH In Focus As Experts Highlight ‘Racket,’ Pricing Distortion

To make things worse, The Wall Street Journal reported that the Justice Department was investigating the company for potential Medicare fraud centered around the company’s Medicare Advantage business.

UnitedHealth said in a statement that it hadn't been notified of any investigation and noted that the report did not have any official attribution.

“The WSJ's reporting is deeply irresponsible, as even it admits that the ‘exact nature of the potential criminal allegations is unclear.’ We stand by the integrity of our Medicare Advantage program,” the company said.

UnitedHealth shares appear to be seeing a relief bounce on Monday with the stock down from around $600 to around $300 in just the last month. UnitedHealth’s RSI fell below 30 last week, suggesting the stock was oversold. UnitedHealth had an RSI of 31 at the time of publication, according to Benzinga data.

UNH Price Action: UnitedHealth shares were up 4.21% at $304.20 at the time of publication Monday, according to Benzinga Pro. UnitedHealth has a 52-week high of $630.73 and a 52-week low of $248.88.

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