UnitedHealth Group (UNH): A Healthcare Giant in Chase Coleman’s Upside Portfolio

Healthcare giant UnitedHealth Group (NYSE:UNH) has emerged as a key holding in the portfolio of billionaire investor Chase Coleman, whose firm Tiger Global Management ranks UNH fourth among its top stocks with "huge upside potential." Despite recent earnings misses and sector-specific headwinds, Coleman’s long-term bet on the company’s scale, dividend stability, and growth trajectory has sparked debate among investors. Let’s dissect the case for UNH in 2025.

The Upside Case: Why UNH Matters to Coleman

Coleman’s $221.97 million stake in UNH, as of April 2025, reflects confidence in its long-term fundamentals. The stock’s 38.06% projected upside potential—driven by its 2.01% dividend yield and operational resilience—aligns with Tiger Global’s strategy of holding defensive giants amid market volatility. Even after trimming its UNH holdings by 81.45% in Q4 2024 (selling 1.9 million shares), the stock remains a top 10 position, suggesting a tactical adjustment rather than a full exit.

Recent Performance: Growth vs. Earnings Headwinds

UNH’s Q1 2025 results were a mixed bag. While revenue surged 9.8% to $109.5 billion, driven by 780,000 new customers, earnings per share (EPS) fell short of expectations at $7.20 (vs. estimates of $7.29). Rising medical costs—particularly in Medicare Advantage plans—and lower-than-expected member engagement in Optum Health services (a division that accounts for 40% of revenue) pressured results.

The fallout was swift: UNH slashed its full-year 2025 EPS guidance to $26–$26.50 from a prior range of $29.50–$30.00, and its stock dropped an additional 5% post-earnings. Analysts at RBC Capital Markets responded by lowering their price target to $525 from $655, citing reimbursement risks but reaffirming an "Outperform" rating.

The Bigger Picture: Why Investors Should Look Beyond Q1

1. Market Share Dominance: UNH’s ability to add nearly 800,000 customers in a single quarter underscores its unmatched salesforce and pricing power. The company now serves 56 million Americans through its UnitedHealthcare division, a scale that few rivals can match.
2. Dividend Stability: With a 54.7% payout ratio, UNH’s dividend appears safe even amid earnings volatility. The 2.01% yield is a rare anchor in a healthcare sector plagued by regulatory and cost uncertainties.
3. AI-Driven Efficiency Gains: While UNH isn’t a pure-play tech stock, its Optum division is investing in AI tools to streamline care delivery and reduce medical costs—key to addressing its Medicare Advantage challenges.

The Risks: Why UNH Isn’t a Free Pass

• Medicare Funding Pressures: Federal rate cuts for Medicare Advantage plans—down 4.8% in 2025—are squeezing margins. UNH’s guidance now assumes a 0.5% decline in Medicare enrollment growth, a significant reversal from prior expectations.
• Optum’s Struggles: Optum Health’s member engagement decline (a 2% drop year-over-year) reflects broader issues in the healthcare sector, including provider shortages and rising consumer costs.

Why Coleman’s Bet Could Still Pay Off

Coleman’s portfolio leans heavily into AI-driven tech stocks like Meta and Microsoft, but UNH’s role as a "value" holding—priced at a 20.4x forward P/E—provides ballast. The stock’s inclusion in 150 hedge funds and its 2.01% dividend yield make it a buy-and-hold candidate for investors with a multiyear horizon.

Conclusion: A Stock to Buy on Weakness

UnitedHealth Group’s near-term challenges are real, but its scale, cash flow, and defensive profile make it a compelling long-term hold. With $109.5 billion in revenue and a 38% upside potential, UNH offers a rare blend of stability and growth in a volatile market. While tech stocks may dominate headlines, investors shouldn’t overlook healthcare’s quiet giants.

Final Take: UNH is a top pick for investors willing to ride out short-term turbulence. Buy on dips—especially if the stock tests its 52-week low—and hold for the long game.

Data sources: Tiger Global 13F filings, UNH Q1 2025 earnings report, RBC Capital Markets analysis.