Another analyst believed in UnitedHealth after Buffett's deal and the Fed rate cut

Barbara Doran of independent wealth management and investment advisory firm BD8 Capital believes that interest in the healthcare sector is increasing following the Fed rate cut, and UnitedHealth could offer investors a real growth opportunity. Despite the problems after the pandemic and a 30% drop in quotes since the beginning of the year, in August the securities added almost 30% on the news of the purchase of more than 5 million shares by Warren Buffett's Berkshire Hathaway.

Founder and Chief Investment Officer of BD8 Capital Barbara Doran said on Wednesday, September 17, that she sees prospects for shares of the American company in the field of health insurance UnitedHealth, reports CNBC. In mid-August, it became known that legendary investor Warren Buffett made a bet on the paper. His company Berkshire Hathaway bought more than 5 million shares of UnitedHealth in the second quarter for $1.6 billion.

Investors are looking for opportunities in the healthcare sector after the Fed rate cut, CNBC explains. According to Doran, UnitedHealth has long been a premium company with industry-leading operational management and stable performance. However, after the coronavirus pandemic, a major problem arose: healthcare utilization was much higher than expected, leading to an underestimation of cost growth.

Doran believes that such "great companies" always have a path to recovery: "I think there is real growth potential here, although not without risks. But management is moving forward in a very positive way".

Since the beginning of 2025, the health insurer's shares have fallen by more than 30%, but only in August they rose almost 30% on the back of the news of Buffett's deal. The growth of UnitedHealth quotes was not a one-step jump, but was formed of two factors: a gradual recovery since the beginning of August and a sharp impulse after the news of the purchase by Berkshire Hathaway and other leading hedge funds. Over the past month, the market capitalization of the company has recovered by about 13%.

UnitedHealth Group operates through its insurance division, UnitedHealthcare, and Optum, which provides services such as pharmacy benefits. Together, these businesses form a powerful ecosystem that is extremely difficult for competitors to replicate, giving the company a strong advantage, Insider Monkey analysts said.

Over the years, UnitedHealth Group has steadily increased both revenue and net income. Despite challenges earlier this year, the company has the resources and strategies to overcome the challenges. Combined with its dominant market position and sustainable competitive barriers, this confirms its long-term strength, Insider Monkey adds.

UnitedHealth shares provide a dividend yield of 2.41%, Barchart analysts emphasize. They remind that the company has increased dividends for 15 years in a row (in the last quarter - by 5% to $2.21 per paper) and forecast the potential for further increases.

According to MarketWatch, of the 30 analysts tracking the insurer's shares, 20 recommend buying them (Buy and Overweight ratings), seven recommend holding, and three suggest selling the securities. The Wall Street consensus target is $323.7, while on the market the securities are traded at $343.7. Thus, the current quotes exceed the target price by $20, or about 6.2%.

This article was AI-translated and verified by a human editor