Market Update: UnitedHealth’s Struggles Amid General Rally
Last week, UnitedHealth stood out for its absence from a significant surge in the market. This has raised eyebrows, especially considering the historically poor performance of insurance stocks. Despite this, the health insurance giant was one of the few names to participate in a rally following an agreement between U.S. and Chinese officials to reduce tariffs by 90 days. The S&P 500 saw a weekly gain of 5.3%, while the Dow Jones Industrial Average also managed to turn positive for 2025.
In a tough week for UnitedHealth, its stock price plummeted to a five-year low on Thursday after reports emerged that the Justice Department is investigating the company for potential Medicare fraud. This led to a staggering 23% drop in stock value over the week.
Using the CNBC Pro Stock Screener tool, we looked into the most heavily sold stocks based on 14-day relative strength index (RSI) readings. The analysis revealed that fewer than 30 stocks might be undervalued and could bounce back, while over 70 stocks are considered overbought and may face declines soon. Notably, UnitedHealth’s RSI stands at just 14.9. Analysts from LSEG still see potential in the stock, suggesting a buying opportunity with a target increase of over 64%, based on its Thursday closing price.
This week’s RSI data reached levels not seen since the financial crisis of 2008, according to Wolfe’s study. However, investors should keep in mind that RSIs fluctuate week to week and mainly reflect short-term trading sentiment. Thus, it doesn’t guarantee a rebound for UnitedHealth, especially with ongoing negative news affecting overall sentiment.
UnitedHealth’s stock has seen a sharp decline since mid-April when it reduced its annual profit outlook due to unexpected medical expenses in its Medicare operations. Over the past month, stocks have dropped by 50%. Interestingly, there was a slight 6.4% bounce back on Friday, attributed to some company insiders purchasing shares.
Another notable stock, Fiserv, has also been oversold with an RSI of 27.6. Its shares fell over 9% following a presentation at JPMorgan’s technology conference, where it was revealed that Clover Business’s growth rate for the second quarter was on par with the first quarter. Yet, analysts remain optimistic, projecting a potential rise of nearly 38%.
Stocks that are appearing over-acquired include Microsoft, Broadcom, and NRG Energy. In particular, NRG Energy is the most overbought with an RSI around 80. Shares in utilities surged by 33% this week after NRG announced a $12 billion deal to acquire natural gas-generating assets from LS Power, which has increased their projected revenue growth rate from 10% to 14% for the next five years.
Meanwhile, Microsoft and Broadcom have RSIs of 74.3 and 75.1, respectively. Analyst Tyler Radke raised Microsoft’s price target, noting strong third-quarter revenue, although the company also announced plans to cut about 3% of its workforce on Tuesday. Microsoft’s stock recorded a weekly gain of 3.5%. Other stocks in excess include discount retailer Roth Store and Trane Technologies, a heating and cooling manufacturer.
