Elevance Health (ELV) stock is one of the worst S&P 500 stocks in Thursday's session. The selloff comes after the health insurance company missed bottom-line expectations for its third quarter and lowered its full-year profit forecast, citing Medicaid uncertainties.
In the three months ended September 30, Elevance Health saw revenue increase 5.2% year-over-year to $44.7 billion. However, its earnings per share (EPS) decreased 6.9% from the year-ago period to $8.37 due to increased costs in its Medicaid business.
The results were mixed compared to analysts' expectations. Wall Street was anticipating revenue of $43.4 billion and earnings of $9.66 per share, according to Yahoo Finance.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business," said Elevance Health CEO Gail Boudreaux in a statement. "We expect Medicaid rates will align with the needs of our members in time, and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger."
Due to its third-quarter results and "the timing mismatch between Medicaid rates and acuity," Elevance Health revised its full-year profit forecast. The company now anticipates earnings of approximately $33 per share, down from its previous guidance for earnings of $37.20.
Is Elevance Health stock a buy, sell or hold?
Elevance Health has underperformed the broader market in 2024, down nearly 7% for the year to date. Still, Wall Street remains bullish on the healthcare stock.
According to S&P Global Market Intelligence, the average analyst target price for ELV stock is $603.65, representing implied upside of almost 40% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Baird is one of those with an Outperform rating (equivalent to a Buy) on the large-cap stock and a $625 price target.
"We believe the power of Elevance's idiosyncratic long-term growth drivers has been significantly underappreciated by investors," wrote Baird analyst Michael Ha in an October 15 note.
Ha believes ELV is "well positioned to see immediate multiple expansion above historical levels" thanks to "numerous recent positive developments within its Carelon segment (both Service and Rx segments) and the high visibility and strength of its 2024 EPS bridge." This puts the company "fully on its way to closing the valuation multiple gap to both UnitedHealth (UNH) and Humana (HUM)," he adds.
Related Content
-
Reasons to Consider Taking Another Look at GoldThe cycle of excessive borrowing to finance government expenditures, grants and aid of all kinds beyond taxable GDP and productivity might not end well.
-
How Trump’s Tariffs Could Impact Your Grocery BillTariffs at the checkout: Preparing for higher grocery bills and how to manage them.
-
Six Steps to Simplify Your Estate for Your HeirsA simplified estate strategy will expedite the settlement of your estate after you're gone, lower audit risk, reduce costs and cut your beneficiaries' stress.
-
Three Actions to Protect Wealth Transfer Amid Tax UncertaintyHow should families plan to pass on their wealth amid ongoing uncertainty over estate taxes? Even if TCJA provisions are extended, they might still be temporary.
-
Business Owners: How to Calculate Your Wealth Gap in Five MinutesHow much would you need from the sale of your business to retire without sacrificing your lifestyle? This simple calculation will give you an idea.
-
Stock Market Today: Dow Adds 485 Points After Trump's Tariff DelayThe White House said it will postpone tariffs on automotive imports from Canada and Mexico for one month.
-
10 Ways to Refine Your Financial Plan for a More Secure FutureSignificant benefits throughout the rest of the year can be had if you take some time now to revisit your financial plan and adjust accordingly.
-
The Most Important Number for a Business Owner Considering a SaleCompany owners hoping to sell and stop working won't know whether an offer on their business is good enough unless they know their 'wealth gap.'Evan
-
Stock Market Today: Dow Drops 670 Points on Trade War EffectA prodigious rally by the battered leader of the AI revolution typified an increasingly volatile picture for investors, traders and speculators.
-
Dividing an Estate? Five Ways to Create TransparencyLetting your children know your intentions while you're still around to explain your reasoning, and while you can make adjustments, can limit discontent later.
