When a shooter in New York murdered UnitedHealth (UNH) executive Brian Thompson, the stock did not drop that day. The next day, the media posted speculation that insurance denial claims were the motive of the crime. UNH’s denial rate is now the stock market’s center of attention.
NBC News reported that the shell casings in the murder had the words deny, defend, and depose. These words are associated with insurance companies not paying for claims.
UNH stock dropped by 5.07% last Friday and 9.93% in the week. This pulled Cigna (CI), Elevance (ELV), CVS Health (CVS), Centene (CNC), and Humana (HUM) lower. Investors should add all of those stocks to a watchlist. Those stocks are trading at a significant discount.
Centene stock, for example, trades at a P/E ratio of 10.08 times. The sector median is 31.6 times. Humana, however, is underperforming because its growth prospects are poor. Still, the firm announced Celesta Mellet will become the next chief financial officer.
At around $550, UNH stock is back to its support price established in June. However, shares are trading at a premium P/E of 37.6 times. The firm may re-visit its denial rate. If it reduces that, the firm’s profitability will fall. That would cause UNH shares to fall further from here.
