UnitedHealth stock fills in the gap as market assesses the bottom is in
- UNH stock rises more than 7%, closing the gap from May 15.
- New CEO Stephen Hemsley buys $25 million worth of UNH stock.
- Shareholders are still waiting to hear about the Justice Department's fraud probe of UnitedHealth.
- US market largely slumps on Moody's downgrade of US government debt.
UnitedHealth Group (UNH), the largest private health insurer in the United States (US), has seen its share price rise more than 7% on Monday to fill the gap created by the May 15 plunge. Now trading north of $314, the daily chart portrays a sell-off that has likely already reached its bottom and has now begun a long trek higher toward a period of consolidation.
Wall Street analysts have largely lowered their price targets for UNH stock between $350 and $400.
The Dow Jones Industrial Average (DJIA) is largely being held up slightly by UNH gains, while the S&P 500 and the NASDAQ Composite both sink moderately lower as the market deals with the fallout from Moody's downgrading US debt late Friday.
UnitedHealth Group stock news
UNH stock has crated over the past month since mid-April when UnitedHealth cut its earnings guidance for 2025 by about 12% before suspending guidance entirely last week in the face of replacing its CEO.
However, former Chair and newly-installed CEO Stephen Hemsley purchased more than $25 million worth of UNH stock on Friday, according to filings with the Securities and Exchange Commission (SEC). The 86.7K shares that Hemsley bought were purchased at an average price of $288.57 and fortified bullish instincts that Thursday's five-year low at $248.88 was the bottom.
Three directors also purchased a combined $1.6 million worth of shares last Wednesday and Thursday, and CFO John Rex bought another 17.2K shares on Friday. This heavy level of insider buying tells the market that the company's executives don't expect recent news to be insurmountable.
Last week, according to The Wall Street Journal, the US Justice Department opened a fraud probe into UnitedHealth's Medicare Advantage business. The article suggests that the regulators are considering whether the company added unnecessary diagnoses to some patients' medical records.
UnitedHealth Group stock forecast
UnitedHealth Group stock has risen above the May 14 low at $307.11 on Monday. This fills in the gap created by May 15's much lower open.
Now trading north of $314, UNH shares have overcome the 161.8% Fibonacci Extension that briefly held up the deluge during the previous week. The next targets for bulls come at the 161.8% Fibonacci Retracement (not shown) at $334.76, the May 13 high at $342, and then the May 12 low at $376.84. Markets love to fill in gaps, so the retracement to $376.84 will be a major point of interest.
UNH daily stock chart
Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
