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Investing.com - UBS maintained its Buy rating and $435.00 price target on Elevance (NYSE:ELV) following the healthcare company’s second-quarter 2025 results. The target represents a significant upside from the current price of $286.06, with InvestingPro analysis indicating the stock is currently undervalued.
The decision comes despite Elevance reducing its earnings per share outlook by $4.50, which translates to approximately $1.3 billion reduction in pre-tax income. According to InvestingPro data, 16 analysts have recently revised their earnings estimates downward, though the company maintains a strong financial health score and trades at an attractive P/E ratio of 12.2x.
Elevance increased its 2025 medical loss ratio (MLR) expectations by 90 basis points, representing an additional $1.435 billion in medical expense costs.
The company attributed the MLR change primarily to worse-than-expected cost trends in the Affordable Care Act exchange and Medicaid businesses, with exchanges experiencing a slightly heavier impact.
The difference between the MLR impact and guidance reduction implies a roughly $135 million offset, likely related to positive general and administrative or tax items that Elevance has referenced, equating to approximately $0.40 in earnings per share.
In other recent news, Elevance Health reported its second-quarter 2025 earnings with adjusted earnings per share of $8.84, aligning with consensus estimates. The company achieved revenues of $49.8 billion, surpassing expectations by approximately 2.8%, driven by increased pharmacy revenues and premiums per policy. Despite these results, several analysts have adjusted their price targets for Elevance. Bernstein lowered its price target to $445, citing pressures from the Affordable Care Act (ACA) and Medicaid. UBS also reduced its target to $435, noting a 12.6% year-over-year decline in earnings per share, which fell $0.14 below consensus estimates. TD Cowen decreased its target to $330 due to pressures in the Health Insurance Exchange (HIX) and Medicaid segments. Guggenheim set a new target of $360, acknowledging cost pressures and a reduction in 2025 earnings per share guidance to about $30. Cantor Fitzgerald reiterated an Overweight rating with a $400 price target, expressing concerns about one-time factors affecting the 2025 baseline.
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