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
-
Stock Market Today: Stocks Soar on China Trade Talk HopesTreasury Secretary Bessent said current U.S.-China trade relations are unsustainable and signaled hopes for negotiations.
-
2026 Disney Dining Plan Returns: Free Dining for Kids & Resort BenefitsPlan your 2026 Walt Disney World vacation now. Learn about the returning Disney Dining Plan, how kids aged three to nine eat free, and the exclusive benefits of staying at a Disney Resort hotel.
-
Stock Market Today: Stocks Soar on China Trade Talk Hopes
Treasury Secretary Bessent said current U.S.-China trade relations are unsustainable and signaled hopes for negotiations.
-
How Can Investors Profit From AI's Energy Use?Global energy demand is expected to grow by leaps and bounds over the next several years as AI usage accelerates. Here's how to get a piece of the pie.
-
Can Trump Fire Powell? A Supreme Court Case Could DecidePresidential posts threaten to overwhelm decades of precedent and tradition, whatever the nine justices decide.
-
What Are AI Agents and What Can They Do for You?AI agents promise to be the next big thing in artificial intelligence, but what exactly do they do?
-
Should You Buy an iPhone Now Before Tariffs Hit?Looming tariffs can make an iPhone purchase seem urgent. Here's what to do if you need another phone but want to save money.
-
SRI Redefined: Going Beyond Socially Responsible InvestingNow that climate change has progressed to a changed climate, sustainable investing needs to evolve to address new demands of resilience and innovation.
-
Here's When a Lack of Credit Card Debt Can Cause You ProblemsUsually, getting a new credit card can be difficult if you have too much card debt, but this bank customer ran into an issue because he had no debt at all.
-
33 Stocks That Could Rally 50% or More This YearAnalysts say these S&P 500 stocks have at least 50% price upside over the next year or so.
