How to weigh up companies after a big share price fall
UnitedHealth (NYS: UNH) is a US mega cap stock. It isn’t well known in Australia, even though it’s had an astonishing fall from grace over the past few months. The medical insurer had been a market darling and a top 20 company in the S&P 500 index, having risen more than 6x over the decade to early April. Then it plummeted.
Figure 1: UnitedHealth share price chart. Source: Morningstar
Greater Government scrutiny of its business practices and the departure of senior executives led to the stock falling almost 60% in just five weeks. The question that many institutional investors are asking is whether the company is now a buy or not.
History gives them some reassurance as UnitedHealth fell more than 80% from highs in the 1980s and dropped…
