Thursday, March 19, 2020

Why UnitedHealth Group Stock Cratered Today

Costs related to the COVID-19 pandemic are expected to be severe.
George Budwell (TMFGBudwell) Mar 18, 2020 at 5:00PM Author Bio
What happened
UnitedHealth Group (NYSE:UNH) couldn't escape the market's terrible day today. Shares of the large-cap diversified health management company ended Wednesday down by 11.22%. Since the start of the year, UnitedHealth has now shed approximately $76 billion worth of market capitalization, or roughly 25% of its prior value. UnitedHealth and nearly all large U.S. insurance companies are getting hammered this year, thanks to the COVID-19 illness.   
So what
Last week, UnitedHealth joined other major U.S. health insurers by waiving the out-of-pocket costs for COVID-19 diagnostic tests for its members. That's the correct course of action, given the scope of the outbreak. But it will have a hefty impact on the bottom lines of U.S. health insurers in general.
In fact, the market seems to think that this deadly respiratory ailment will cost UnitedHealth tens of billions of dollars when everything is said and done. That's a rather harsh assessment to be sure, but COVID-19 is spreading like wildfire in the U.S. right now. As such, the market's dire outlook may actually be warranted. 
Now what
Should bargain hunters pounce on this top health management stock? While there are still a lot of moving parts with this COVID-19 pandemic, UnitedHealth's shares are now trading at less than 1 time 2021 projected revenue. So there's a strong case to be made here that perhaps this healthcare stock has fallen too hard, too fast at this point. More downside could be on the way, but the bottom has to be close at these levels. Hence, bargain hunters may indeed want to add this beaten-down health insurance stock to their portfolios soon.  

George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.

https://www.fool.com/investing/2020/03/18/why-unitedhealth-group-incorporated-stock-is-crate.aspx

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