Many Stocktwits users rallied behind the stock after-hours, calling the selloff a fear-driven overreaction.

UnitedHealth Group, Inc.’s stock (UNH) plunged over 8% in after-hours trading on Wednesday, following a Wall Street Journal article of a federal criminal investigation into potential Medicare fraud, adding to turmoil already set off by a sudden CEO shakeup. However, retail traders on Stocktwits appeared unfazed.

The Journal, citing unnamed sources, said the Justice Department has been conducting a criminal probe into UnitedHealth since at least last summer. 

The inquiry reportedly centers around Medicare billing practices and comes on top of other federal investigations into potential antitrust violations.

UnitedHealth responded to the report, stating that the company has not been notified by the DoJ yet of “the supposed criminal investigation reported, without official attribution, in the Wall Street Journal.”

“The WSJ’s reporting is deeply irresponsible, as even it admits that the ‘exact nature of the potential criminal allegations is unclear,’” the company said.

“We stand by the integrity of our Medicare Advantage program.”

The Journal noted that UNH’s latest annual filing acknowledges ongoing government audits and reviews but does not mention any criminal, civil or antitrust probes as reported.

On Stocktwits, sentiment for UNH ended on an ‘extremely bullish’ on Wednesday, prior to the news, with message volume trending at ‘extremely high’ levels.

UNH sentiment and message volume as of May 14. | source: Stocktwits

Many retail investors on the platform rallied behind the stock after-hours, calling the selloff a fear-driven overreaction.

“UNH just erased 5 years of gains. If you’re not buying here you are MISSING OUT!!!” posted one bullish watcher.

“This wasn’t a fundamentals issue it was a fear event … I stayed focused and averaged in. Let the rebound handle the rest,” said another.

Several users urged other retail investors to buy the dip, arguing that UNH was too big a company to fail.

Earlier on Wednesday, Wall Street analysts dropped mixed reactions following UnitedHealth’s first-quarter earnings miss, suspension of full-year guidance and CEO Andrew Witty being abruptly replaced by former chief executive Stephen Hemsley.

Raymond James doled out a double downgrade — from ‘Strong Buy’ to ‘Market Perform’ — citing the surprise guidance withdrawal. The research firm warned visibility for the rest of 2025 is “very low” and flagged risks tied to the company’s Medicare Advantage (MA) plan performance.

Bank of America also cut its rating to ‘Neutral’ from ‘Buy’ and slashed its UNH price target to $350 from $560, citing similar MA worries. The research firm believes restoring margins may come at the cost of flat or declining membership growth.

Still, several major firms held their bullish ratings:

  • Wells Fargo: Lowered PT to $351 from $677, maintained ‘Overweight.’ Believes mispricing issues are company-specific rather than industry-wide.
  • Morgan Stanley: Cut PT to $374 from $563, kept ‘Overweight.’ Said guidance cut likely reflects short-term cost pressures, not deeper structural issues.
  • Oppenheimer: Lowered PT to $400 from $600, maintained ‘Outperform.’ Backed new CEO Hemsley’s leadership amid rising care activity.
  • KeyBanc: Cut PT to $450 from $575, maintained ‘Overweight.’ Called the CEO change expected but flagged surprise in guidance suspension.

UNH stock has lost over 38% this year and has shed over half its value from all-time highs hit in November 2024.

According to Koyfin data, UNH currently trades at an about 50% discount to analysts’ average price target of $462.59. Out of 27 research firms covering the stock on Wall Street, 22 have a ‘Buy’ or ‘Strong Buy’ recommendation, five have a ‘Hold’ rating, while none have a sell rating.   

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