UnitedHealth Is Cutting Medicare Advantage Commissions. How Should You Play UNH Stock Here?
UnitedHealth (UNH) shares are in focus on Tuesday following reports the health insurance giant is removing commissions for brokers on a small percentage of Medicare Advantage plans.
The company believes removing incentives tied to selling these plans could cut costs that made it suspend its full-year guidance last month.
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At the time of writing, UnitedHealth stock is down nearly 50% versus its year-to-date high in April.
Removing broker incentives may prove significantly positive for UNH shares since it may reduce enrollment in higher-cost plans, helping the insurer regain control over its margins.
Investors could read the company's decision as a proactive step toward stabilizing its earnings and restoring financial discipline.
While regulatory pressures remain, cost containment measures like this could ease concerns and support the case for a rebound in UnitedHealth stock – especially as the NYSE-listed firm continues to lead the fast-growing Medicare Advantage market.
UNH currently pays a dividend yield of 2.87%, which makes up for another good reason to have it in your investment portfolio.
Speaking with CNBC today, Hightower's chief investment strategist Stephanie Link also dubbed the Medicare Advantage news a positive since it's 'what got them in trouble in the first place.'
Link agreed that the next few months will likely remain volatile for UNH stock – but reiterated her constructive view on the insurance behemoth for the long term.
According to the Hightower's top strategist, UnitedHealth shares are currently going for about 13 times earnings only, which she said was 'too cheap for the number one player in the industry.'
Additionally, Link expects UNH to soon announce an extended share repurchase program that she believes could breathe new life into the healthcare stock in the back half of 2025.
Despite ongoing challenges and a massive crash in UnitedHealth stock this year, Wall Street hasn't thrown in the towel on the world's largest health insurer.
The consensus rating on UNH currently sits at 'Moderate Buy' with the mean target of about $364 indicating potential upside of 18% from current levels.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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