At least two research firms said the stock may have bottomed following the “latest in a string of setbacks.”

Shares of UnitedHealth Group, Inc. (UNH) fell over 17% on Tuesday after the health insurance giant said CEO Andrew Witty would step down for personal reasons, with chairman and former chief executive Stephen Hemsley taking his place. 

The company also suspended its full-year outlook, citing continued acceleration in care activity and rising costs.

However, the stock rose over 2% after the closing bell, with retail trader sentiment on Stocktwits also surging amid some Wall Street analyst commentary that downplayed concerns.

According to The Fly, Morgan Stanley analyst Erin Wright said the announcement was the “latest in a string of setbacks” for UnitedHealth, warning that elevated cost trends — especially beyond the Group Medicare Advantage segment — will likely weigh on UNH shares and pressure peers.

The research firm, however, maintained its ‘Overweight’ rating and $563 price target, which represents an 80% upside from the last close.

UnitedHealth said care activity is not only surging but broadening across more benefit offerings than seen in the first quarter, leading investors to worry if the cost spike extends beyond just one company.

RBC Capital’s Ben Henrix maintained an ‘Outperform’ rating and $525 price target (68% upside from last close) on UNH, saying Tuesday’s stock plunge likely prices in 200 basis points of Medicare Advantage margin deterioration.

The firm views that as sufficient to “call a bottom” in UNH shares, adding that it was optimistic about Hemsley’s return as CEO even as the company tries to get a grip on cost trends.

Meanwhile, Cantor Fitzgerald lowered its price target on UNH to $440 from $660 (which still represents a 41% upside from the previous close) but kept an ‘Overweight’ rating and said the selloff presents a buying opportunity.

“This is likely the bottom,” the firm said, echoing RBC Capital’s view, adding that UNH’s diversified business model offers downside protection and it expects a return to 13%-16% earnings growth.

The firm acknowledged short-term uncertainty in the MA and Optum health services businesses, but views these risks as modest.

On Stocktwits, retail sentiment for UNH jumped back into ‘extremely bullish’ territory, following a dip during the regular session, while 24-hour message volume surged by more than 255%.

UNH sentiment and message volume as of May 13. | source: Stocktwits

One user labeled UNH's Tuesday tumble as an "amazing dip buying opportunity for long-term investors," adding that Hemsley's return was "like Bezos coming back to Amazon."

Another user was encouraged by Wall Street analysts largely keeping their ratings unchanged on the stock, saying "6 analysts reiterated their 'Buy' rating today - 5 of the 6 with price targets well above $500!"

Over the past year, UnitedHealth has faced a series of major setbacks: a major cyberattack at its tech unit, a federal investigation into its Medicare billing, a sharp rise in medical costs, and most significantly, last year's murder of its insurance unit CEO in New York days before an investor conference.

UnitedHealth investor Bahl & Gaynor's COO, Kevin Gade, called Witty's sudden exit “a surprise” and suggested a possible link to "the recent killing of his co-worker, the constant fear for his family’s safety, and the operational strain," according to Reuters report.

UNH stock has lost over 38% this year.   

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