If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world, and his annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors.

Shares of UnitedHealth Group are surging before the market open Friday as Warren Buffett’s Berkshire Hathaway disclosed that it recently purchased shares of the beleaguered insurer.

While this confirms our earlier evaluation that the stock seems attractively priced, the underlying operational challenges still exist—medical cost ratios sitting at 89.4%, compressed profit margins,...