Jim Cramer Changes Tune on UnitedHealth Group Incorporated (UNH): ‘At $400, I’m Starting a Position’

The healthcare sector has long been a bastion of steady growth, but few companies exemplify this resilience better than unitedhealth group (UNH). After a brutal earnings miss in Q1 2025 sent shares plummeting nearly 30% in a single week, the market is now pricing in fear over fundamentals. But here’s why the sell-off creates a golden opportunity: At $400, this healthcare titan is primed for a comeback. Let’s break it down.

The Earnings Miss: A Speedbump, Not a Roadblock

UnitedHealth reported Q1 2025 results that missed Wall Street estimates by $2 billion in revenue and $0.09 per share in EPS, triggering a selloff. But here’s the critical nuance: Underlying growth remains unshaken. Year-over-year revenue rose 9.8%, and profits grew 5.7%, with analysts projecting 15% annual profit growth over the next three years. This isn’t a company in decline—it’s a juggernaut tripping over its own shoelaces.

Ask Aime: "Is UnitedHealth Group poised for a comeback from its recent 30% sell-off?"

Valuation: A Discount on a Growth Machine

The sell-off has pushed UNH’s forward P/E ratio down to the sector average of ~16, while its FWD price-to-cash flow (P/CF) ratio now sits 25% below the sector average. That’s undervalued by any measure. Add a 2% dividend yield and a 36% free cash flow payout ratio, and you’ve got a stock that’s rewarding investors while reserving ample capital for growth. This isn’t a “value trap”—it’s a value goldmine.

Why UnitedHealth Will Thrive Under Trump

This isn’t just about numbers—it’s about strategy. UnitedHealth’s dominance in healthcare insurance and its $300 billion scale (via segments like UnitedHealthcare and Optum) give it pricing power and operational flexibility. Under the Trump administration, UNH faces zero regulatory headwinds, unlike Big Tech or pharma firms. It’s a domestic powerhouse insulated from trade wars, with no reliance on tariffs-prone supply chains.

Cramer’s mantra here? “Do whatever it wants.”

Institutional Support: 150 Funds Can’t Be Wrong

Over 150 institutional investors held UNH as of Q4 2024, including top hedge funds. These aren’t day traders—they’re long-term players betting on UNH’s consolidation-driven growth and fat margins (20%+ operating margins, even after the miss). This isn’t a flash in the pan; it’s a generational bet.

The AI Distraction: UNH Isn’t a “Get Rich Quick” Play—But That’s the Point

While Wall Street chases AI moonshots (many of which are overhyped and overpriced), UNH offers stability. Sure, an under-the-radar AI stock might surge 50% in a month, but UNH’s 15% annual profit growth and 2% dividend make it a core holding for a portfolio. As Cramer often says, “Don’t let the noise drown out the signal.”

Conclusion: Buy at $400—This Is a Lifelong Position

The data is clear:
- Price action: Shares are down 30% in a week, but the business is intact.
- Valuation: Forward P/E at sector average, FWD P/CF 25% below peers.
- Growth: 15% annual profit growth projected, with $2 billion in annual free cash flow.
- Safety: 2% dividend yield, 36% payout ratio—room to grow both.

At $400, UNH isn’t just a stock—it’s a bet on the future of American healthcare. The near-term noise will fade. The long-term opportunity? Forever.

Action to take: Start a position at $400. This is a “buy the dip” moment that comes once a decade.

Investing involves risk. Past performance does not guarantee future results.