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Indianapolis-based Elevance Health, Inc. (ELV) operates as a health benefits company. With a market cap of $121.8 billion, Elevance Health operates through Health Benefits, CarelonRx, Carelon Services, and Corporate & Other segments. Its offerings include healthcare products, insurance products, managed care services, pharmacy services, and more. The healthcare giant is expected to announce its Q3 earnings on Wednesday, Oct. 16.
Ahead of the event, analysts expect Elevance Health to report a profit of $9.74 per share, up 8.3% from $8.99 per share reported in the year-ago quarter. Moreover, the company surpassed Wall Street’s EPS estimates in each of the past four quarters. Its EPS for the last reported quarter grew 11.9% year-over-year to $10.12, exceeding the consensus estimates by 1.3%.
In fiscal 2024, analysts expect Elevance Health to report an EPS of $37.26, up 12.4% from $33.14 in fiscal 2023. While in fiscal 2025, its EPS is expected to grow 11.8% year-over-year to $41.65.
ELV has gained 10.3% in 2024, lagging behind the S&P 500 Index’s ($SPX) 20.8% gains and the Health Care Select Sector SPDR Fund’s (XLV) 12.9% returns on a YTD basis.
Despite surpassing expectations, shares of Elevance plummeted 5.8% after the release of its Q2 earnings on Jul. 17. The company reported total operating revenues of $43.2 billion, slightly above the consensus estimate of $43.1 billion. Notably, Elevance achieved a net margin expansion of 105 basis points, reaching 5.3%, which fueled a substantial 24.1% year-over-year increase in net income to shareholders, totaling $2.3 billion.
The drop in share price can be attributed to the lackluster performance of its health benefits segment, the largest revenue driver for the company. This segment observed a decline of 2.2% in annual operating revenues to $37.2 billion. The decrease was primarily due to lower premiums resulting from Medicaid membership attrition. Although premium rate increases across all lines of business partially offset the revenue decline, the segment still saw an $841 million revenue reduction compared to the year-ago quarter, making investors jittery.
The consensus opinion on the ELV stock is strongly bullish, with an overall “Strong Buy” rating. Out of the 20 analysts covering the stock, 16 recommend “Strong Buy,” two suggest “Moderate Buy,” and two advise a “Hold” rating.
The mean price target of $603.84 suggests a potential upside of 16.1% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
