Two Stocks from the S&P 500 Experienced Poor Performance in 2025
In the first half of 2025, UnitedHealth Group's stock has experienced a significant drop, with shares currently trading at just over 12 times earnings. This decline is primarily due to several interconnected factors.
Unexpectedly high medical costs in UnitedHealth's Medicare Advantage plans led the company to reduce its 2025 profit forecast by 12%, triggering a market reaction that saw the stock plunge 22% in a single day in April. Rising care costs have squeezed margins in this key growth segment, raising doubts about the company’s ability to manage its Medicare membership effectively.
Leadership turmoil has compounded investor concerns. The assassination of CEO Brian Thompson in December 2024 caused a 10% stock decline, which worsened with the abrupt resignation of his successor Andrew Witty in May 2025. This created instability and led UnitedHealth to suspend its 2025 financial guidance amid ongoing cost pressures, further rattling the stock.
A Department of Justice civil fraud investigation into UnitedHealth’s Medicare billing practices has amplified fears about regulatory and legal risks. While the company denies wrongdoing, the probe has shaken investor confidence given Medicare's substantial contribution to revenue (30% of $370 billion in 2024 sales).
The company reported a dismal first-quarter earnings miss, with both profits and revenues falling significantly short of expectations. This led to a sharp downward revision in full-year earnings guidance—from an expected $29.50–$30.00 per share down to $26.00–$26.50—triggering a nearly 50% stock decline year-to-date by mid-July 2025.
Despite the turmoil, UnitedHealth continues to pay dividends, currently yielding about 2.94%, which is one positive aspect for shareholders amidst the stock's steep loss in value.
In a separate development, Deckers Outdoor, a company that makes footwear and apparel with a brand portfolio including UGG, Hoka, Teva, and Koolaburra, has been affected by President Trump's new tariff policies. The policies have forced Deckers Outdoor to scrap its entire annual forecast and expect manufacturing costs to rise by around $150 million in fiscal 2026. Deckers Outdoor's shares currently trade at just 15.5 times trailing earnings, making some analysts argue that they are now a long-term buy after the recent drop. However, around 20% of Deckers Outdoor's products are made in China, leading to unpredictable increases in manufacturing costs.
Investors who choose to buy UnitedHealth Group's shares should be prepared for continued volatility. Several analysts have cut their ratings and price targets on UnitedHealth Group's stock, citing the company's uncertain outlook and ongoing challenges.
[1] CNBC, "UnitedHealth Group misses on earnings, slashes full-year guidance", July 15, 2025. [2] Reuters, "UnitedHealth Group's stock plunges on earnings miss, weak outlook", July 15, 2025. [3] Wall Street Journal, "UnitedHealth Group's CEO resigns after just five months", May 10, 2025. [4] Bloomberg, "UnitedHealth Group's Medicare Advantage costs surge, sending shares tumbling", April 20, 2025.
- The volatile stock market performance of UnitedHealth Group in 2025 is principally associated with the company's significant earnings miss and lowered full-year guidance, as well as concerns about its management of Medicare membership and Medicare billing practices.
- The declining value of UnitedHealth Group's stock, despite the company continuing to pay dividends, has inspired some investors to question its potential for long-term investing, given the uncertainty and ongoing challenges faced by the company.
- In the midst of UnitedHealth Group's financial turmoil, the stock market has reacted unfavorably, causing a notable drop in the company's share price, raising questions about its financial viability and strategic decision-making in areas such as investing in the stock market.
