UnitedHealth (UNH) shares soared as much as 14% on Friday after a regulatory filing confirmed legendary investor Warren Buffett has built a nearly $1.6 billion stake in the beleaguered healthcare giant.

Buffett’s conglomerate Berkshire Hathaway (BRK.A) (BRK.B) now owns about 5 million UNH shares in total. Other high-profile names that have capitalized on UnitedHealth’s crash this year include “Big Short” investor Michael Burry and David Tepper, the founder of Appaloosa Management. 

Including today’s surge, UnitedHealth stock is up roughly 30% versus its year-to-date low set in early August. Compared to its share price on April 11, however, it’s still down nearly 50%.    

What Buffett’s Stake Mean for UnitedHealth Stock

Buffett’s $1.6 billion stake is massively constructive for UNH stock as it signals conviction in the insurer’s long-term value despite its recent struggles. 

The “Oracle of Omaha” has reputation for disciplined, value-driven investing, which often boosts market confidence, attracts institutional interest, and stabilizes sentiment. 

Plus, sizable investments from other notable investors like Burry and Tepper reinforces the narrative that UnitedHealth shares are undervalued, potentially poised for recovery. 

Their collective endorsement is a huge vote of confidence in the company’s fundamentals, business model, and resilience, driving renewed investor optimism and upward momentum in the stock. 

Should You Invest in UNH Shares at Current Levels

Buffett’s investment may be a reason to load up on UnitedHealth stock also because “it’s available at a 50% discount,” according to a renowned professor at the University of Maryland, David Kass. 

Kass agrees that UNH will see “major fines” and the NYSE-listed behemoth will have to fire some executives, but said longer term, “the company will survive and likely regain its prominence in the industry.”

He recommends owning UNH shares at current levels also because it offers robust finances, above-average profitability and “a below average price-to-earnings (P/E) ratio.”

A healthy 2.9% dividend yield makes up for another great reason to buy UnitedHealth stock here. 

UnitedHealth Remains a ‘Buy’-Rated Stock

Investors should also note that Wall Street hasn’t entirely turned its back on UnitedHealth stock. 

The consensus rating on UNH shares currently sits at “Moderate Buy” with price targets going as high as $440, indicating potential upside of another 42% from current levels.