Buffett Just Bought the Dip--Is This Health Giant the Comeback Play of the Year?

UnitedHealth Group (NYSE:UNH) just caught a lifelinestraight from two of Wall Street's most respected investors. Shares jumped 8.75% at 9.31am today, marking the stock's biggest intraday gain since 2020. The catalyst? Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway disclosed a fresh 5 million-share stake, while David Tepper (Trades, Portfolio)'s Appaloosa Management added another 2.3 million shares. That's a bold vote of confidence for a company that's been hammered this year, down 46% amid regulatory heat and earnings disappointments.

Warning! GuruFocus has detected 5 Warning Sign with UNH.

The health insurance heavyweight is navigating one of the roughest stretches in its history. A top executive was murdered late last year. In April, the company slashed its full-year outlook, then replaced its CEO with former chief Stephen Hemsley. Most recently, UnitedHealth issued a fresh profit forecast that came in below every single analyst estimatea stunning reversal for a business that had beaten expectations for over 60 straight quarters.

So what broke the streak? UnitedHealth underestimated how quickly Americans would return to using medical servicesand set premiums too low as a result. Meanwhile, changes in government-subsidized coverage and payment models are eating into margins. If this trend holds, 2025 could mark the first annual adjusted EPS decline in nearly 20 years. Still, Buffett and Tepper stepping in suggests they see something others don't: a dominant business under temporary pressure, with long-term upside hiding in the wreckage.

This article first appeared on GuruFocus.

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