Investors are unloading UnitedHealth Group Inc. today after the healthcare giant suspended its full-year guidance and announced a surprise departure of its chief executive, Andrew Witty.
Witty is stepping down due to “personal reasons” while the NYSE listed firm has pulled guidance due to “higher-than-anticipated medical expenditures,” as per its press release on Tuesday.
Following today’s decline, UNH shares are down nearly 50% versus their year-to-date high.
However, shares of the insurance behemoth will likely move nowhere but up from here as much of the bad news is already baked into them at current levels, said Jeff Kilburg in a CNBC interview today.
Why is Jeff Kilburg uber bullish on UnitedHealth stock?
Kilburg is bullish on UnitedHealth stock primarily because “it’s an essential name” that is available to buy at a deep discount at writing.
The NYSE-listed firm is the only one that “has figured out the pay collection mechanism” in the US, the chief executive of KKM Financial argued on “The Exchange”.
Kilburg agreed that there was significant amount of uncertainty surrounding UNH shares currently but said its Relative Strength Index (RSI) at 15, an unusually oversold territory, is too hard to ignore.
“It’s a broken chart [that’s] providing a great opportunity,” he added.
UNH shares could rally under the new chief executive
Kilburg recommends owning UNH stock at current levels also because the healthcare giant has named Stephen Hemsley as its new chief executive.
That’s a big positive for investors since Hemsley knows the UnitedHealth business inside and out, having served as its top boss from 2006 to 2017.
Under his leadership, shares of the Minnetonka headquartered firm rallied more than 300% in that decade.
Kilburg also cited examples of Starbucks and Disney to establish that hiring a former CEO tends to trigger a meaningful recovery in a company’s stock price.
Note that UnitedHealth is a dividend stock that currently yields 2.67%, which offers another great reason to own it in 2025.
UNH is well-positioned to navigate government scrutiny
In April, UnitedHealth reported disappointing earnings for its first financial quarter.
Additionally, the insurance firm is facing government scrutiny over the cybersecurity breach at its subsidiary, Change Healthcare – as well as allegations that it inflated diagnoses to secure higher payments from the administration.
Still, Kilburg remains constructive on UNH stock as “it’s an essential name” that the government will likely remain “committed to”.
“What would the US economy be without UnitedHealth,” he argued, touting the 51 million subscribers it currently has on its health insurance plans and supplemental coverage options.
Wall Street analysts agree with the KKM boss on UnitedHealth shares as well. Consensus rating on the healthcare stock currently sits at “buy” with upside to about $546 on average.
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