Is UnitedHealth Group (UNH) a Compelling Buy at Its Current Valuation? A Deep Dive into Institutional Buying Trends and Earnings Momentum

Institutional investor activity in Q3 2025 reveals a nuanced landscape. On one hand, some heavy hitters have trimmed their stakes. For instance, Jeff Hahne's Appaloosa Management reduced its position in UNH to 203.5K shares, down from 550K in Q2 2025, while Huntington National Bank cut its holdings by 28.4%, leaving it with 76,828 shares valued at $23.97 million according to MarketBeat. Similarly, PNC Financial Services Group Inc. sold 329,609 shares, reducing its stake by 27.4% to 872,370 shares valued at $272.15 million. These moves suggest caution, potentially reflecting concerns about valuation or sector-specific risks.

Conversely, other institutions have doubled down. Vanguard Group Inc., for example, increased its holdings by 6.6% to 90.73 million shares, valued at $47.52 billion. ProShare Advisors LLC also boosted its stake by 5.1%, acquiring 13,538 additional shares to reach a total of 279,291 shares valued at $87.13 million. Notably, Summit X LLC raised its position by 428% in Q2 2025, signaling strong confidence in UNH's long-term prospects. These contrasting actions highlight a divergence in institutional sentiment, with some investors prioritizing risk management while others see value in UNH's resilience.

Earnings Momentum: A Strong Foundation

Despite the mixed institutional signals, UnitedHealth's fundamentals remain robust. In Q3 2025, the company reported adjusted earnings per share (EPS) of $2.92, exceeding Wall Street's expectations by $0.05. Revenue surged to $113.2 billion, a 12% year-over-year increase, driven by strong performance in its health benefits and services segments. This earnings beat underscores UNH's ability to navigate macroeconomic headwinds, including inflationary pressures and regulatory shifts, while maintaining its dominance in a sector poised for long-term growth.

Analysts have taken note. As of November 2025, the consensus rating for UNH is "Moderate Buy", with a median price target of $397.12 and some individual targets as high as $440. This optimism is rooted in UNH's scalable business model, which combines insurance, pharmacy benefits, and data analytics to create a moat against competition.

Dividend Yield and Analyst Sentiment: A Dual Attraction

For income-focused investors, UNH's dividend of $2.21 per share, payable on December 16, 2025, offers an annualized yield of 2.7% according to Finbold. This payout, consistent with the previous quarter, reflects the company's commitment to shareholder returns even as it reinvests in high-growth areas like digital health and AI-driven care management.

Analyst sentiment further bolsters the case for UNH. A "Moderate Buy" consensus aligns with the company's earnings trajectory and its role as a bellwether in the healthcare sector. While some analysts caution about near-term valuation concerns, the long-term outlook remains favorable, particularly as demand for healthcare services grows with an aging population and technological advancements.

Strategic Considerations for Investors

The institutional buying trends present a key dilemma for investors. The sell-offs by firms like Appaloosa and PNC suggest a degree of caution, potentially driven by short-term profit-taking or macroeconomic jitters. However, the aggressive buying by Vanguard, ProShare, and Summit X LLC indicates that many institutional investors view UNH as a core holding in a diversified portfolio.

For those considering entry, the decision hinges on balancing these signals with UNH's earnings momentum and sector dynamics. The healthcare sector, while cyclical, is underpinned by structural tailwinds-aging demographics, rising healthcare costs, and innovation in telemedicine and AI. UNH's diversified revenue streams and strong balance sheet position it to capitalize on these trends.

Conclusion: A Calculated Buy

UnitedHealth Group's current valuation reflects a blend of caution and optimism. While institutional selling by some players raises questions about short-term risks, the broader institutional appetite, coupled with UNH's earnings resilience and attractive dividend yield, supports a strategic entry point for long-term investors. For those willing to navigate the mixed signals and focus on the company's fundamentals, UNH remains a compelling buy-provided investors align their time horizon with the sector's long-term growth trajectory.