UNH in Crisis — Watch This Stock Instead

UnitedHealth (NYSE: UNH) stock is in freefall … but the healthcare plan industry isn’t. 

Despite the drama at UNH, which is now C-rated according to our Zen Ratings system…

The industry is soaring, with an A rating overall. (Here’s why that Industry Grade matters.)

So instead of waiting and watching the UNH dip, it’s worth asking: Why not own the better-rated operator instead?

Enter Elevance Health (NYSE: ELV) — another healthcare plan giant with a Zen Rating of B, or “Buy.”

Here’s what’s going on with UNH, and why I’d rather buy shares of ELV today. 

The UNH Blowup

UNH has lost more than half its value in just over a month — its worst drawdown since the 2008 financial crisis. 

So what’s going on?

• A surprise CEO departure (following a surprise CEO execution) and the return of Stephen Hemsley
• A criminal Medicare fraud investigation
• A massive cyberattack on its Change Healthcare unit
• Worst of all? A complete withdrawal of earnings guidance

Despite massive insider buying and some signs of bottoming, the situation is chaotic — and trust is shaken. 

Some investors also think UNH’s pharmacy benefits manager (PBM), Optum Rx, is in the political crosshairs after the new Trump executive order aimed at slashing U.S. drug prices which I wrote about last week.

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ELV: A Quiet, Stronger Alternative

While UNH is in turmoil, Elevance Health (formerly Anthem) is quietly executing. 

It’s the only company that controls the Blue Cross Blue Shield insurance brand in 14 key states — a massive moat in healthcare branding and distribution.

ELV has steadily built out a vertically integrated model through its Carelon division (health services, PBM, and behavioral health) and has a strong presence in both Medicare Advantage and Medicaid — two government-funded segments seeing long-term growth.

And unlike UNH, ELV isn’t drowning in headline risk.

It’s also scoring better across its Zen Component Grades, currently earning a B Grade in Artificial Intelligence, Value, and Growth. It’s rare for a company to score well across both Growth and Value, and that’s why I think this opportunity in health insurers is so interesting. You can sidestep the #1 mistake of growth investors, which is overpaying.

These health insurance companies are not only trading at compelling valuations, but they also consistently grow earnings and revenue over the years:

Click here to see ELV earnings metrics.

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ELV is also a consensus buy among top-rated Wall Street analysts, with an average price forecast of 17.5% over the next year: 

Click here to see ELV price targets from analysts.

Bottom Line

I think UNH likely recovers and does fine. But ELV is the better-rated, steadier play in an A-rated industry — without the legal landmines, cyber breaches, and political heat. It’s flying under the radar while controlling one of the top brands in health insurance. 

Looking for healthcare exposure? This could be the moment to buy smart, not just cheap.

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