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UBS reiterated its Buy rating and $555.00 price target on Elevance (NYSE: ELV), currently trading at $378.19 with a market capitalization of $85.3 billion, despite the company’s adjustment to its earnings distribution for 2025. According to InvestingPro data, analyst targets range from $428 to $585, with seven analysts recently revising earnings estimates downward. Elevance now expects first-half earnings to represent 60% of full-year results, down from the previously indicated 62-63% following its first-quarter release.
The healthcare company, trading at a relatively modest P/E ratio of 14.7 and showing revenue growth of 6.6% in the last twelve months, identified three factors affecting second-quarter earnings expectations, listed in order of significance: higher underlying acuity in Affordable Care Act (ACA) populations following membership attrition, out-of-network billing issues in behavioral health services concentrated in exchanges, and Medicaid cost trends not decelerating as rapidly as anticipated. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued.
Elevance is taking action against the out-of-network billing challenges, including litigation against certain providers. The company noted that higher risk pools in both ACA and Medicaid programs are likely to persist through the second half of 2025, with offsetting factors expected to have greater impact in the fourth quarter.
The company acknowledged that claims data was only available through April, and patterns could shift in either direction. While ACA membership attrition aligned with Elevance’s mid-single-digit estimate, the company did not anticipate higher utilization rates among remaining members and lacks Wakely data to determine if this trend affects market-wide risk adjustment assumptions.
In response to second-quarter trends, Elevance is exploring expense management opportunities to support performance in the second half of the year, with particular attention to Medicaid utilization patterns where red states’ more rigid redetermination processes have led to higher acuity in remaining members. For deeper insights into Elevance’s financial health and future prospects, including exclusive ProTips and comprehensive analysis, check out the detailed research report available on InvestingPro.
In other recent news, Elevance Health has maintained its earnings guidance for 2025, projecting full-year earnings per diluted share between $28.30 and $29.00, with adjusted earnings expected to fall between $34.15 and $34.85. This guidance reflects the company’s current outlook on market conditions and operational performance. Barclays (LON:BARC) has reiterated its Overweight rating on Elevance Health, maintaining a price target of $522, despite adjusting its second-quarter earnings per share forecast downward due to a higher medical loss ratio. Similarly, Cantor Fitzgerald has reaffirmed its Overweight rating and a $485 price target, expressing confidence in Elevance’s earnings potential, particularly in the Carelon segment and potential commercial margin expansion.
Additionally, Elevance Health conducted its Annual Meeting of Shareholders, where directors were elected, executive compensation was approved, and Ernst & Young LLP was ratified as the independent auditor for 2025. A shareholder proposal for a report on Diversity, Equity, and Inclusion efforts was not approved. These developments indicate Elevance’s ongoing efforts to maintain investor confidence and adapt to market challenges while focusing on strategic growth opportunities.
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