$UNH buy the fear or sell into narrative?

Feb 21

- UNH has gotten into trouble with bad headlines after bad headlines.
- Recent DOJ probe led to 12% shaving in the stock price.

- Could it be a buying opportunity or just a falling knife?
- Are you afraid that UNH could become HUM 2.0?


Let's talk about fundamentals!

Year | 2024 | 2025 | 2026 | 2027 | 2028
GAAP EPS | 15.76. | 28.22 | 32.11 | 36.80 | 41.11
EPS growth% | -33.47% | 79.08% | 13.77% | 14.61% | 11.71%

It appears that 2024/ Early 2025 was the year when EPS growth bottomed and would go from negative to positive back again.

EPS growth is healthy double digit in mid teens. A fair forward p/e multiple for mid teen EPS growth should at least be 15 ( conservatively )


Year | 2024 | 2025 | 2026 | 2027 | 2028
Fair Stock Price (w/ forward p/e = 15 ) | $236 | $423 | $481 | $552 | $616

However, UNH is a blue chip company and has a moat. Therefore, Investors will be willing to pay forward p/e of 20 once negative news subside.

Year | 2024 | 2025 | 2026 | 2027 | 2028
Fair Stock Price (w/ forward p/e = 20 ) | $315 | $564 | $642 | $736 | $822.2

Final Take:
I'm a buyer of UNH < 450 will add more if it dips below 400 for the long term. Good quality companies don't usually buyers to get their skin into the game. Therefore, it's better to buy the fear than selling into narrative.

Feb 21

Note

Anyone who's thinking to buy for the long term. Buy it in increments 1/3 or 1/4 lot size. One would never get the bottom right but getting a comfortable average to hold through tough times will provide patience to bear through the tough phase!

Good luck!

Mar 7

Note

If it breaks 500s then we have room to re-test 540-550s. If macro remain slumpy/bearish then UNH should flirt with $600

Trade active

- Fair value for UNH in 2025 is around $550-564 and in 2026 is around $642 therefore It's easy buy and hold for me in the portfolio.

- EPS is growing healthily and fair forward multiple is compressed so I have good margin of safety.