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On Wednesday, Cantor Fitzgerald reaffirmed its positive stance on Elevance Health Inc. (NYSE:ELV), maintaining an Overweight rating and a price target of $485.00. The firm’s analyst, Sarah James, noted that Elevance’s performance is starting to be viewed more favorably compared to its industry peers, particularly after delivering a clean financial quarter. This perspective contrasts with UnitedHealth Group’s (NYSE:UNH) recent performance. According to InvestingPro data, Elevance maintains a "GREAT" overall financial health score of 3.01/5, with particularly strong profitability metrics. The company has generated $176.8 billion in revenue over the last twelve months, establishing itself as a prominent player in the Healthcare Providers & Services industry.
Elevance Health’s cost trends have remained high across all business segments, yet they align with the company’s previous guidance and pricing strategies. According to James, if these trends continue, there might be potential for Elevance to exceed its financial guidance slightly. She also suggested that the stock’s valuation multiples may have been disproportionately affected by concerns over adverse selection—a term referring to a situation where insurers end up with a higher-than-expected proportion of high-risk insured individuals. InvestingPro analysis shows the company trades at a P/E ratio of 16.7x and has maintained consistent dividend payments for 15 consecutive years, with a recent dividend yield of 1.64%.
The analyst highlighted the significant difference in the movement of valuation multiples between Elevance and its competitors, CVS Health Corp (NYSE:CVS) and Humana Inc . (NYSE:HUM), since the adverse selection concerns surfaced in September 2024. She pointed out that Elevance’s multiples have experienced a fourfold and twofold change compared to CVS and Humana, respectively.
Despite these challenges, James believes that the current sentiment towards Elevance Health is shifting to a more positive outlook. She reiterated the $485 price target, which implies a 17% increase from the stock’s current trading level. This target is sustained by the belief that the market may have overreacted to the adverse selection fears, and there may be a case for Elevance’s stock multiples to recover.
In other recent news, Elevance Health Inc. reported its first-quarter financial results for 2025, surpassing Wall Street’s expectations with an adjusted earnings per share (EPS) of $11.97, compared to a forecast of $11.08. The company’s revenue reached $48.9 billion, exceeding consensus estimates by 5%. Elevance’s Carelon division demonstrated significant growth, with revenues surging to $16.7 billion, marking a 37.9% increase year-over-year. The company’s medical loss ratio (MLR) was reported at 86.4%, approximately 60 basis points below the consensus, indicating effective cost management. Elevance Health reaffirmed its 2025 adjusted EPS guidance, projecting earnings between $34.15 and $34.85. Bernstein analysts maintained their Outperform rating for Elevance, with a target price of $585, reflecting confidence in the company’s stable performance and growth prospects. The analysts noted that Elevance’s strategy in the Carelon division aligns with their long-term outlook for the company. Additionally, Elevance Health is actively building out its services business, aiming to compete with UnitedHealth Group in terms of impact.
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