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Here's Why Investors are Retaining Elevance (ELV) Stock Now
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Elevance Health, Inc. (ELV - Free Report) is well-poised to grow on the back of premium rate hikes in the Health Benefits business, a growing customer base and overall Carelon business strength. The BioPlus acquisition is expected to support its CarelonRx unit’s performance.
Elevance — with a market cap of $104.2 billion — is one of the largest publicly traded health insurers in the United States, in terms of membership. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for ELV’s 2023 earnings is pegged at $32.89 per share, indicating 13.1% year-over-year growth. The estimate has witnessed one upward movement in the past month against none in the opposite direction. Elevance beat on earnings in all the last four quarters, with an average surprise of 2.8%. This is depicted in the graph below.
The consensus mark for current-year revenues stands at $168.4 billion, suggesting an 8.2% rise from the prior-year reported number. Higher product revenue, administrative fees and premiums are likely to boost the top line.
Our estimate for 2023 premiums indicates more than 5% year-over-year growth. We expect product revenues to jump nearly 14% this year, while administrative fees and other revenues are expected to increase close to 6%.
Considering the segments, we expect Health Benefits to witness 5.4% growth on the back of premium rate adjustments and higher membership in its Medicaid business. Overall, Carelon will likely see a nearly 10% increase due to improving performance in CarelonRx and Carelon Services units. A solid medical management business is expected to drive its Carelon numbers.
Furthermore, ELV’s focus on expanding the capabilities of Carelon is likely to position the company for long-term growth. The augmentation of post-acute care services will further drive the platform, which significantly complements its Health Benefits business. The BioPlus integration at CarelonRx is ahead of schedule, which will boost its capabilities.
Strategic buyouts and collaborations play a major role in ELV’s long-term growth prospects. Acquisitions like Integra Managed Care, MMM Holdings, Beacon Health, BioPlus and others have strengthened its operations and enhanced its services. We expect more partnerships and inorganic growth opportunities to present themselves in the coming days.
The company’s shareholder value boosting efforts are appreciated by investors. It bought back shares worth $646 million in the second quarter alone and had a leftover buyback capacity of $5.6 billion as of Jun 30, 2023. Also, its dividend yield of 1.3% is higher than the industry average of 0.9%.
However, there are a few factors that investors should keep an eye on. For example, rising expenses are reducing its margins. Last year, expenses jumped 13.9% year over year. It witnessed an 11.7% increase in the metric in the first half of this year. We expect increased benefit expenses, operating expenses and cost of products sold to keep overall costs high. 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 HCA Healthcare’s 2023 bottom line suggests a 9.2% increase from the prior-year levels. HCA has witnessed two upward estimate revisions in the past month against none in the opposite direction. It beat earnings estimates in three of the last four quarters and missed once, with the average surprise being 5.4%.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past month against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.
The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 56.9% year-over-year increase to $1.93 per share. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.
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Here's Why Investors are Retaining Elevance (ELV) Stock Now
Elevance Health, Inc. (ELV - Free Report) is well-poised to grow on the back of premium rate hikes in the Health Benefits business, a growing customer base and overall Carelon business strength. The BioPlus acquisition is expected to support its CarelonRx unit’s performance.
Elevance — with a market cap of $104.2 billion — is one of the largest publicly traded health insurers in the United States, in terms of membership. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for ELV’s 2023 earnings is pegged at $32.89 per share, indicating 13.1% year-over-year growth. The estimate has witnessed one upward movement in the past month against none in the opposite direction. Elevance beat on earnings in all the last four quarters, with an average surprise of 2.8%. This is depicted in the graph below.
Elevance Health, Inc. Price and EPS Surprise
Elevance Health, Inc. price-eps-surprise | Elevance Health, Inc. Quote
The consensus mark for current-year revenues stands at $168.4 billion, suggesting an 8.2% rise from the prior-year reported number. Higher product revenue, administrative fees and premiums are likely to boost the top line.
Our estimate for 2023 premiums indicates more than 5% year-over-year growth. We expect product revenues to jump nearly 14% this year, while administrative fees and other revenues are expected to increase close to 6%.
Considering the segments, we expect Health Benefits to witness 5.4% growth on the back of premium rate adjustments and higher membership in its Medicaid business. Overall, Carelon will likely see a nearly 10% increase due to improving performance in CarelonRx and Carelon Services units. A solid medical management business is expected to drive its Carelon numbers.
Furthermore, ELV’s focus on expanding the capabilities of Carelon is likely to position the company for long-term growth. The augmentation of post-acute care services will further drive the platform, which significantly complements its Health Benefits business. The BioPlus integration at CarelonRx is ahead of schedule, which will boost its capabilities.
Strategic buyouts and collaborations play a major role in ELV’s long-term growth prospects. Acquisitions like Integra Managed Care, MMM Holdings, Beacon Health, BioPlus and others have strengthened its operations and enhanced its services. We expect more partnerships and inorganic growth opportunities to present themselves in the coming days.
The company’s shareholder value boosting efforts are appreciated by investors. It bought back shares worth $646 million in the second quarter alone and had a leftover buyback capacity of $5.6 billion as of Jun 30, 2023. Also, its dividend yield of 1.3% is higher than the industry average of 0.9%.
However, there are a few factors that investors should keep an eye on. For example, rising expenses are reducing its margins. Last year, expenses jumped 13.9% year over year. It witnessed an 11.7% increase in the metric in the first half of this year. We expect increased benefit expenses, operating expenses and cost of products sold to keep overall costs high. Nevertheless, we believe that a systematic and strategic plan of action will drive ELV’s growth in the long term.
Key picks
Some better-ranked stocks in the broader medical space are HCA Healthcare, Inc. (HCA - Free Report) , Atai Life Sciences N.V. (ATAI - Free Report) and Select Medical Holdings Corporation (SEM - 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 HCA Healthcare’s 2023 bottom line suggests a 9.2% increase from the prior-year levels. HCA has witnessed two upward estimate revisions in the past month against none in the opposite direction. It beat earnings estimates in three of the last four quarters and missed once, with the average surprise being 5.4%.
The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past month against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.
The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 56.9% year-over-year increase to $1.93 per share. It has witnessed one upward estimate revision over the past month against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.