Elevance Health Faces Challenges as Stock Underperforms Despite Strong Financial Position
With a market cap of $90.6 billion, Elevance Health, Inc. (ELV) stands as a prominent health benefits provider, offering a range of health plans, pharmacy services, and healthcare solutions throughout the United States. Operating under brands such as Anthem Blue Cross and Blue Shield, Wellpoint, and Carelon, the company aims to assist individuals and communities in achieving better health outcomes.
Stock Performance Struggles in a Rising Market
Over the past 52 weeks, shares of Elevance Health have struggled compared to the overall market. Specifically, ELV has declined 26.3% during this period, while the larger S&P 500 Index ($SPX) has increased nearly 23%. Year-to-date, ELV stock has risen just 1.8%, contrasted with SPX’s 4% gain.
A deeper look shows that the Indianapolis, Indiana-based company has also lagged behind the Health Care Select Sector SPDR Fund’s (XLV) modest rise over the same span, which saw a 5.9% gain year-to-date.
Quarterly Results Do Not Match Expectations
Elevance Health reported better-than-expected Q4 2024 adjusted EPS of $3.84 and operating revenues reaching $45 billion on January 23. However, despite these figures, shares of ELV fell marginally the following day. The adjusted EPS revealed a decrease of 31.7% year-over-year. Particularly concerning was a 75% plunge in the operating gain of the Health Benefits segment and a decline of 150 basis points in its operating margin. The company’s medical membership dropped 2% year-over-year to 45.7 million, missing consensus estimates primarily due to Medicaid attrition. Compounding these issues were rising total expenses, a fall in net investment income, and a management forecast suggesting lower margins for both the Health Benefits and Carelon Services segments in 2025.
For the current fiscal year ending in December 2025, analysts predict an EPS growth of 2.8% year-over-year, reaching $33.96. The company’s history of earnings surprises is inconsistent; it has beaten consensus estimates in three of the last four quarters while missing on one occasion.
Analyst Ratings Show Mixed Sentiment
Among the 20 analysts covering Elevance Health, the overall consensus rating currently stands at “Strong Buy.” This rating is based on 14 “Strong Buy” ratings, one “Moderate Buy,” and five “Holds.” Significantly, this outlook is slightly less upbeat than three months ago, during which the stock had 15 “Strong Buy” ratings.
On February 19, analyst Sarah James from Cantor Fitzgerald maintained an “Overweight” rating on Elevance Health, setting a price target of $485, attributing it to its undervaluation and solid financial status. As of this writing, ELV is trading below the average price target of $485.13. The highest price target on Wall Street, $625, suggests a potential upside of 62.5% from current price levels.
On the date of publication, Sohini Mondal did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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