What Happened?
A number of stocks fell in the afternoon session after industry bellwether UnitedHealth Group (UNH) slashed its 2025 profit forecast after reporting a significant surge in medical costs, sending shockwaves across the health insurance sector.
The core of the issue stems from an “unprecedented medical cost trend environment,” particularly within the Medicare Advantage market, which are privately run versions of the federal health insurance program. UnitedHealth, the largest provider in this space, now expects these costs to rise by 7.5% in 2025, a significant jump from its earlier 5% projection, with the potential to accelerate to almost 10% in 2026. In response, the insurer announced it will drop plans covering over 600,000 people. The company's lowered earnings forecast has raised investor concerns that these surging costs and utilization rates are an industry-wide problem, impacting the profitability of other carriers as well.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Genomics & Sequencing company PacBio (NASDAQ:PACB) fell 6.4%. Is now the time to buy PacBio? Access our full analysis report here, it’s free.
- Genomics & Sequencing company 10x Genomics (NASDAQ:TXG) fell 3.7%. Is now the time to buy 10x Genomics? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Imaging, Diagnostics company QuidelOrtho (NASDAQ:QDEL) fell 3.2%. Is now the time to buy QuidelOrtho? Access our full analysis report here, it’s free.
- Medical Devices & Supplies - Specialty company STAAR Surgical (NASDAQ:STAA) fell 3.2%. Is now the time to buy STAAR Surgical? Access our full analysis report here, it’s free.
- Health Insurance Providers company Clover Health (NASDAQ:CLOV) fell 3.5%. Is now the time to buy Clover Health? Access our full analysis report here, it’s free.
Zooming In On PacBio (PACB)
PacBio’s shares are extremely volatile and have had 89 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 7.4% on the news that the company announced it had joined the 1000 Genomes Long Read Sequencing Project, a major global human genomics initiative.
The life sciences technology company said it would contribute its advanced long-read sequencing technology to the project. In collaboration with researchers at the University of Washington and Johns Hopkins University, PacBio's Kinnex RNA kits and Revio sequencing platform will be used to generate detailed data on gene expression from approximately 1,000 samples. This participation was seen as a significant development, as it placed PacBio's highly accurate HiFi sequencing technology at the center of a foundational research effort. The project aimed to create a large, open-access resource for the global genetics community, which could help accelerate research into human health and disease. Investors reacted positively to the news, which positioned PacBio to potentially expand its market opportunities and drive broader adoption of its sequencing solutions.
PacBio is down 14.5% since the beginning of the year, and at $1.54 per share, it is trading 41.9% below its 52-week high of $2.65 from November 2024. Investors who bought $1,000 worth of PacBio’s shares 5 years ago would now be looking at an investment worth $399.84.
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