On Wednesday, Truist Securities maintained a positive stance on Elevance Health (NYSE:ELV) stock, reiterating a Buy rating and a price target of $620.00.
The firm acknowledged Elevance's solid second-quarter performance, highlighting in-line revenues and a Medical Loss Ratio (MLR) that modestly surpassed estimates. The company reported an operating revenue of $43.22 billion, closely aligning with Truist's projection of $43.24 billion and the consensus of $43.05 billion.
Elevance's MLR stood at 86.3%, slightly better than the anticipated 86.5% from Truist and the consensus of 86.4%. This was attributed to rate adjustments reflecting medical cost trends and robust commercial underwriting.
The cost of products came in at 87.2%, slightly better than the estimate of 87.4%, while the adjusted operating expense ratio was reported at 11.5%, higher than the expected 11.1%, due to investments in growth initiatives.
The company's total adjusted operating gain was $2.84 billion, surpassing Truist's expectation of $2.75 billion. The Health Benefits segment showed a marginal year-over-year increase in dollar terms, with margins improving by 20 basis points.
Carelon, Elevance's health services platform, exhibited a growth of 8.0% year-over-year, driven by strong performance in Carelon Services, particularly in risk-based arrangements.
Although the number of customers served in Carelon Services saw a slight decrease year-over-year and sequentially, revenue per customer surged by 33.8%, significantly exceeding Truist's estimate of 22.1%.
CarelonRx experienced a 1.0% year-over-year growth in prescriptions, in line with expectations, while operating gain remained steady amidst ongoing investments in specialty services and home delivery. Intersegment eliminations were up by 8.4% year-over-year to $7.38 billion.
Elevance's adjusted EPS of $10.12 outperformed both Truist's estimate of $9.88 and the consensus of $10.01. Additionally, the company reaffirmed its full-year guidance of at least $37.20 and upheld its long-term target for annual adjusted EPS growth of at least 12%. Further insights are expected following the company's conference call scheduled for 8:30 AM ET.
In other recent news, Elevance Health surpassed Wall Street's quarterly profit expectations due to lower-than-anticipated medical costs for its members, and an increase in membership for both Obamacare and its commercial health plans.
Despite a decrease in Medicaid plan membership, the company reported an adjusted profit of $10.12 per share, outpacing analyst estimates of $10.01 per share for the second quarter.
Morgan Stanley (NYSE:MS) maintained an Overweight rating on Elevance, with a price target of $643, highlighting the company's second quarter 2024 adjusted earnings per share (EPS) of $10.12. TD Cowen also reiterated a Buy rating with a price target of $624, expressing confidence in Elevance's financial preparedness.
Elevance's recent developments also include strategic partnerships and a collaboration with the private equity firm Clayton, Dubilier & Rice to expand its primary care services, as noted by Mizuho Securities, which raised the shares price target to $585.
InvestingPro Insights
As Elevance Health (NYSE:ELV) continues to demonstrate robust financial health, a glance at the real-time data from InvestingPro underscores its market position. With a substantial market capitalization of $128.56 billion and a P/E ratio of 18.04 for the last twelve months as of Q1 2024, Elevance is trading at a valuation that reflects its leadership in the Healthcare Providers & Services industry. The company's revenue growth of 6.89% over the last twelve months further attests to its steady performance in a competitive sector.
InvestingPro Tips highlight that Elevance has been consistently rewarding shareholders, raising its dividend for 13 consecutive years and maintaining dividend payments for 14 consecutive years. This commitment to shareholder returns is coupled with a dividend yield of 1.18% as of mid-2024. Additionally, the company's stock has been trading near its 52-week high, indicating market confidence in its prospects. For investors seeking deeper insights and additional tips on Elevance Health, there are 11 more InvestingPro Tips available, providing a comprehensive outlook on the company's financials and market performance.
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