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Indianapolis-based Elevance Health, Inc. (ELV) operates as a health benefits company. It supports consumers, families and communities across the entire healthcare journey, supporting them to lead healthier lives. With a market cap of $92.8 billion, Elevance operates through Health Benefits, CarelonRx, Carelon Services, and Corporate & Other segments.
Companies worth $10 billion or more are generally described as "large-cap stocks," Elevance fits this bill perfectly. Given the company employs over 100,000 associates and serves over 118 million people at every stage of health, its valuation above this mark is not surprising. It addresses a full range of needs with an integrated approach, powered by industry-leading capabilities and a digital platform for health.
However, the healthcare giant has fallen to a lofty perch, with its stock trading 30.7% below its all-time high of $567.26 achieved on Sept. 3. In the past three months alone, the stock has plummeted over 27.8% underperforming the Dow Jones Industrials Average’s ($DOWI) 9.8% gains during the same time frame.
The stock has lagged behind the Dow over the longer term as well. ELV stock has declined 16.7% on a YTD basis and 18.5% over the past 52 weeks compared to DOWI’s 18.8% gains in 2024 and 23.9% returns over the past year.
To confirm the recent downturn, Elevance has been trading below its 50-day moving average since late September and below its 200-day moving average since the start of October.
Elevance’s stock prices plummeted 10.6% and continued to drop for the next four trading sessions after the release of its disappointing Q3 results on Oct. 17 leading to the recent downturn. The company’s medical memberships declined 3.2% or 1.5 million compared to the year-ago quarter to 45.8 million, due to a high attrition rate in its Medicaid business. And due to higher acuity, its adjusted EPS declined 6.9% year-over-year to $8.37, missing analysts’ estimates by a notable 13.7%. Observing this trend the company reduced its full-year adjusted EPS guidance from previously announced $37.20 to $33.00, making investors jittery.
However, driven by higher premium yields in the Health Benefits segment and growth in CarelonRx product revenue, Elevance’s total operating revenues grew by an impressive 5.3% year-over-year to $44.7 billion. And the company remains confident in navigating through the challenges in its Medicaid business and the long-term earnings potential of its diverse businesses.
Elevance has lagged behind its peer The Cigna Group’s (CI) 7.7% gains in 2024 and 25.2% returns over the past year.
Nevertheless, the stock has a consensus “Strong Buy” rating among the 20 analysts covering it. Its mean price target of $520.05 represents a staggering 32.3% premium to current price levels.
