UnitedHealth (NYSE: UNH) has triggered one of its strongest technical bullish signals in over 15 years, with the stock plunging into deeply oversold territory.
On the weekly and monthly Relative Strength Index (RSI) charts, UNH has fallen to a level not seen since the 2008 financial crisis, with the metric reading at 27.78.
Importantly, an RSI below 30 often signals a stock is oversold and poised for a bounce. The last time UNH hit this level, it rebounded sharply.
After weeks of steep losses driven by leadership changes and regulatory pressures, UNH has dropped from about $600 in early April to $295, marking a nearly 30% decline in just a month. As a result, this oversold level may offer the stock some much-needed relief.
UNH stock troubles
UNH’s troubles began following CEO Andrew Witty’s abrupt resignation on May 13. Shortly thereafter, the company suspended its 2025 financial outlook.
The decision was attributed to soaring medical costs, especially in Medicare Advantage plans, and a surge in care demand exceeding expectations.
Stephen Hemsley, who served as CEO from 2006 to 2017, has since returned to stabilize the company, expressing disappointment in recent performance but reaffirming confidence in long-term growth.
Nevertheless, challenges accelerated on May 15 after the Wall Street Journal reported a DOJ criminal investigation into UnitedHealth’s Medicare Advantage billing practices.
Interestingly, the stock has found some footing after investor confidence was boosted by an insider initiative to buy a massive number of shares amid waning sentiment around the American healthcare company.
Meanwhile, Wall Street remains skeptical of UnitedHealth’s short-term outlook. For instance, Truist cut UnitedHealth’s price target from $580 to $360 but maintained a “Buy” rating, citing suspended guidance, leadership changes, and rising Medicare Advantage costs.
Similarly, TD Cowen downgraded UNH to “Hold,” cutting its target from $520 to $308, attributing the decision to coding pressures, regulatory changes, margin struggles, and the DOJ probe.
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