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Elevance (ELV) Rises 14.9% YTD: What Lies Ahead for Investors?
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Shares of Elevance Health, Inc. (ELV - Free Report) have jumped 14.9% in the year-to-date period compared with the 4.8% growth of the industry it belongs to, thanks to its strong operations, new contracts in its Government business and optimization efforts. Factors such as premium rate increases and inorganic growth initiatives are further enhancing its results, allowing the company to raise its guidance, which has been well-received by investors.
Elevance Health, with a market capitalization of $127.3 billion, is one of the largest publicly traded health benefits providers in the United States. The company also boasts a prudent capital deployment history. These factors are collectively contributing to this Zacks Rank #3 (Hold) company's notable price appreciation.
Image Source: Zacks Investment Research
Can it Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for ELV’s 2024 earnings is pegged at $37.25 per share, which witnessed four upward estimate revisions and no downward movement in the past month. The estimate indicates a 12.4% year-over-year increase. Elevance Health beat on earnings in all the last four quarters, with an average surprise of 2.8%.
The consensus mark for full-year 2024 revenues stands at nearly $172.2 billion, suggesting a 1.2% rise from the prior-year reported number. Our estimate indicates increases in product revenues and administrative fees & other revenues, which are likely to support the top-line growth.
We expect the company’s product revenues to rise by 5% year over year in 2024 due to growth in adjusted scripts and revenue per script. Moreover, growing Health Benefits service fees continue to aid administrative fees & other revenues.
Expansion of services to ELV’s customers and new external client wins bodes well for its Carelon business. Acquisitions like BioPlus continue to boost its Carelon performance. We expect total operating income from the segment to witness a nearly 12% year-over-year jump in 2024.
Consistent dividend payouts and stock repurchases enhance ELV’s shareholder value. In 2023, the company repurchased shares worth $2.7 billion and an additional $566 million in the first quarter of 2024. As of Mar 31, 2024, it had $3.6 billion remaining under its share buyback authorization. Additionally, it paid out $379 million in quarterly dividends during the first quarter.
These positive factors are likely to help the company maintain its share growth trajectory and continue outperforming the industry.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
The company’s total medical membership fell 1.2% year over year in 2023 and 3.9% in the first quarter of 2024. We expect it to decline to 46.4 million for the full year 2024 from 47 million in 2023, which can affect its premium generation. Also, its benefit expense ratio is still above the pre-pandemic levels, meaning a lower amount remains in hand after paying claims. Nevertheless, we believe that a systematic and strategic plan of action will drive ELV’s growth in the long term.
The Zacks Consensus Estimate for Sera Prognostics’ 2024 bottom line suggests 19% year-over-year growth. SERA‘s average earnings surprise for the past four quarters is at 3.7%. The consensus mark for its current-year revenues indicates a 14.4% year-over-year increase.
The Zacks Consensus Estimate for Brookdale Senior’s full-year 2024 earnings suggests a 38.1% year-over-year improvement. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. BKD beat earnings estimates in two of the past four quarters and missed on the other occasions.
The Zacks Consensus Estimate for Encompass Health’s 2024 full-year earnings implies a 12.6% increase from the year-ago reported figure. EHC beat earnings estimates in each of the last four quarters, with an average surprise of 18.7%. The consensus mark for its current-year revenues is pegged at $5.3 billion, which indicates a 10.5% year-over-year increase.
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Elevance (ELV) Rises 14.9% YTD: What Lies Ahead for Investors?
Shares of Elevance Health, Inc. (ELV - Free Report) have jumped 14.9% in the year-to-date period compared with the 4.8% growth of the industry it belongs to, thanks to its strong operations, new contracts in its Government business and optimization efforts. Factors such as premium rate increases and inorganic growth initiatives are further enhancing its results, allowing the company to raise its guidance, which has been well-received by investors.
Elevance Health, with a market capitalization of $127.3 billion, is one of the largest publicly traded health benefits providers in the United States. The company also boasts a prudent capital deployment history. These factors are collectively contributing to this Zacks Rank #3 (Hold) company's notable price appreciation.
Image Source: Zacks Investment Research
Can it Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for ELV’s 2024 earnings is pegged at $37.25 per share, which witnessed four upward estimate revisions and no downward movement in the past month. The estimate indicates a 12.4% year-over-year increase. Elevance Health beat on earnings in all the last four quarters, with an average surprise of 2.8%.
The consensus mark for full-year 2024 revenues stands at nearly $172.2 billion, suggesting a 1.2% rise from the prior-year reported number. Our estimate indicates increases in product revenues and administrative fees & other revenues, which are likely to support the top-line growth.
We expect the company’s product revenues to rise by 5% year over year in 2024 due to growth in adjusted scripts and revenue per script. Moreover, growing Health Benefits service fees continue to aid administrative fees & other revenues.
Expansion of services to ELV’s customers and new external client wins bodes well for its Carelon business. Acquisitions like BioPlus continue to boost its Carelon performance. We expect total operating income from the segment to witness a nearly 12% year-over-year jump in 2024.
Consistent dividend payouts and stock repurchases enhance ELV’s shareholder value. In 2023, the company repurchased shares worth $2.7 billion and an additional $566 million in the first quarter of 2024. As of Mar 31, 2024, it had $3.6 billion remaining under its share buyback authorization. Additionally, it paid out $379 million in quarterly dividends during the first quarter.
These positive factors are likely to help the company maintain its share growth trajectory and continue outperforming the industry.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
The company’s total medical membership fell 1.2% year over year in 2023 and 3.9% in the first quarter of 2024. We expect it to decline to 46.4 million for the full year 2024 from 47 million in 2023, which can affect its premium generation. Also, its benefit expense ratio is still above the pre-pandemic levels, meaning a lower amount remains in hand after paying claims. Nevertheless, we believe that a systematic and strategic plan of action will drive ELV’s growth in the long term.
Key Medical Picks
Investors interested in the broader Medical space may look at some better-ranked players like Sera Prognostics, Inc. (SERA - Free Report) , Brookdale Senior Living Inc. (BKD - Free Report) and Encompass Health Corporation (EHC - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sera Prognostics’ 2024 bottom line suggests 19% year-over-year growth. SERA‘s average earnings surprise for the past four quarters is at 3.7%. The consensus mark for its current-year revenues indicates a 14.4% year-over-year increase.
The Zacks Consensus Estimate for Brookdale Senior’s full-year 2024 earnings suggests a 38.1% year-over-year improvement. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. BKD beat earnings estimates in two of the past four quarters and missed on the other occasions.
The Zacks Consensus Estimate for Encompass Health’s 2024 full-year earnings implies a 12.6% increase from the year-ago reported figure. EHC beat earnings estimates in each of the last four quarters, with an average surprise of 18.7%. The consensus mark for its current-year revenues is pegged at $5.3 billion, which indicates a 10.5% year-over-year increase.