Shares of the company plunged more than 23% last week, hitting a new five-year low on Thursday after a Wall Street Journal report that the DoJ is conducting a criminal probe into potential Medicare fraud.

UnitedHealth Group, Inc. (UNH) is emerging from a rough week as the health insurance stock stood out as one of the few major laggards amid a broader rally in U.S. equities.

Shares of the company plunged more than 23% last week, hitting a new five-year low on Thursday after a Wall Street Journal report that the Department of Justice is conducting a criminal probe into potential Medicare fraud. In comparison, the S&P 500 gained 5.3% and the Dow Jones rose 1.8% (turning positive for the year).

According to Koyfin data, UNH ended the week with a 14-day relative strength index (RSI) of 19.7, well below the oversold threshold of 30 and the lowest among all S&P 500 stocks. 

Wolfe Research reportedly noted that this marks the stock’s most deeply oversold condition since the 2008 financial crisis.

Despite the steep selloff, UnitedHealth managed to claw back some gains with a 6.4% surge on Friday after the company denied having received any DoJ notice and insider buying activity sparked renewed interest. 

According to regulatory filings, Director Kristen Gil purchased 3,700 UNH shares at an average price of $271.17, while Director Timothy Flynn — who also chairs Walmart’s audit committee — bought 1,533 shares at $320.80. 

That helped retail investor sentiment for UNH on Stocktwits end Friday on an ‘extremely bullish’ note amid a 390% surge in weekly message volume.

UNH sentiment and message volume as of May 16. | source: Stocktwits

“Seems like a long-term hold type of play, insiders buying is just too obvious, they know the company is severely undervalued,” said one user.

“$UNH too easy. $450+ too easy. Santa came early this year,” said another, implying a 54% rally from the last close.

Retail traders have also speculated that UnitedHealth could be the subject of a secret accumulation by Berkshire Hathaway, based on Warren Buffett’s well-known interest in insurance companies as cash-flow machines.

Still, there is some caution as the RSI is a short-term momentum indicator, and analysts warn that more negative headlines (especially around the DoJ probe) could continue to pressure the stock.

Over the past month alone, UNH stock has lost over half its value on the back of a profit forecast cut in April tied to higher medical costs in its Medicare business.

However, Wall Street remains broadly bullish: out of 27 firms covering UNH, 22 rate it a ‘Buy’ or ‘Strong Buy,’ with the average price target sitting at $431.37 — roughly 47% above Friday’s close, according to Koyfin data.

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