UnitedHealth stock sinks below $380 for first time in four years

UNH stock sinks for the fourth day in a row.
Dow Jones Industrial Average pulls back ahead of the weekend.
Part of the stock market is optimistic for this weekend's trade meeting between China and the US.
UnitedHealth stock has been trending lower since lowering full-year guidance.

Clay Webster FXStreet

UnitedHealth Group (UNH) stock traded lower on Friday, sinking to four-year lows below $379. Shares of the US' largest health insurer moved steadily lower in the session for the fourth straight session. UNH stock has traded lower for 12 out of the last 16 sessions following its April 17 earnings release in which management cut full-year earnings guidance by ~12%.

The downward pressure on UNH shares over recent weeks has contrasted sharply with optimism in the overall broad market. But on Friday, the two are aligned. The Dow Jones Industrial Average (DJIA), which includes UnitedHealth as one of its largest weightings, has moved moderately lower as UNH shaves off another 1.7%.

The stock market is generally hopeful for a breakthrough at trade talks between the US and China this weekend, and President Donald Trump told reporters he might lower tariffs on Chinese goods from 145% to 80% as a sign of good will.

UnitedHealth Group stock news

The drastic 37% sell-off that has impressed traders with its momentum is largely a product of management cutting its full-year guidance for adjusted earnings per share (EPS) from the $29.50 to $30.00 range to $26.00 to $26.50. That circa 12% revision was all it took for a large swath of shareholders to exit their positions.

It doesn't seem to matter to the market that the issue at hand is higher medical utilization. The medical care ratio rose from 84.3% last year to 84.8% in the first quarter. The trend was due to a higher mix of seniors on insurance plans and changes to Medicare payment terms, but the management called the issue seasonal in nature.

"We are aggressively addressing those challenges to position us well for the years ahead and return to our long-term earnings growth rate target of 13% to 16%,” said Andrew Witty, chief executive officer of UnitedHealth Group, in a statement in April.

On Wednesday, a group of shareholders sued the company for allegedly hiding how public backlash to the killing of UnitedHealthcare CEO Brian Thompson had pushed the company to change its business practices. The suit filed in Manhattan court alleges that UnitedHealth altered its policy that had previously led to higher claim denials without sharing these details with shareholders.

UnitedHealth Group stock forecast

As UNH stock decisively sank below $380 on Friday, as well as below the 100% Fibonacci Extension placeholder at $384.51, potential bulls are asking themselves where to enter this trade. After all, this is the insurance industry, and UnitedHealth Group has been one of the most dependable dividend growth stocks for some time.

What's more, UNH stock tends to favor V-shaped recoveries after sell-offs. This happened in April 2024, December 2024, and again in February of this year. So quick reversals are what bulls have come to respect.

There is some historical support in the mid-$360s from early 2021, but more bearish observers might hope that UNH sails down to the 161.8% Fibo at $313.19. Others will find that unlikely, as that level is so far below the current price dynamic.

UNH daily stock chart

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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.

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