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Why Elevance (ELV) is a Smart Addition to Your Portfolio Now
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Elevance Health, Inc. (ELV - Free Report) is strategically poised for growth, driven by increasing memberships in individual commercial risk-based businesses and Blue Card businesses. Improving performance in the Carelon Services business is a significant tailwind for the company.
Elevance, with a market capitalization of $118.6 billion, is a major health benefits company in the United States. Due to solid prospects, this currently Zacks Rank #2 (Buy) stock is worth investing in at the moment. In this analysis, we'll explore the growth drivers and estimates and highlight the key factors investors should monitor.
Let’s delve deeper.
The Zacks Consensus Estimate for ELV’s 2024 earnings is pegged at $37.14 per share, indicating 12.1% year-over-year growth. The company witnessed one upward estimate revision over the past 30 days against no movement in the opposite direction. Elevance beat on earnings in each of the last four quarters, with an average surprise of 3.1%. This is depicted in the figure below.
The consensus mark for 2024 revenues stands at $172.4 billion, suggesting 1.3% growth from a year ago. Headquartered in Indianapolis, IN, Elevance’s top line is poised to capitalize on increasing product revenues, administrative fees and other revenues. Our model predicts more than 5% year-over-year growth in 2024 product revenues, along with a 12.1% year-over-year increase in administrative fees and other revenues.
The company’s shares have gained 11.9% in the past year, outperforming the industry’s 7.6% growth and the Medical sector’s 10.7% increase. Thanks to its strong operations, the stock is expected to sustain its upward trajectory.
Increased premiums from the Commercial Health Benefits business and a growing membership base are expected to drive the company's top-line growth. We expect memberships in Blue Card and individual businesses to witness more than 5% and 16% year-over-year growth, respectively, in 2024. Additionally, the expansion of memberships in dental and vision lines will contribute significantly to this positive trend.
Its Carelon platform continues to grow, thanks to the expansion of CarelonRx pharmacy product revenues, supported by a rise in the number of external pharmacy members served. Enhanced performance in the Carelon Services business is expected to further contribute to profit growth. Additionally, the recent acquisition of Paragon Healthcare, integrated into the CarelonRx pharmacy services unit, is anticipated to strengthen its position in the market.
The Paragon Healthcare acquisition, along with several others in the past, such as BioPlus specialty pharmacy, continue to scale ELV’s Carelon business and enable it to lower costs of care and provide greater choices to the patients. Moreover, ELV strategically divests non-core assets to enhance profitability. With a return on invested capital of 11%, surpassing the industry average of 8.2%, the company demonstrates superior efficiency in generating returns from its capital investments compared to industry peers.
Key Concern
However, there are a few factors that investors should keep an eye on. One, for example, is rising expenses, which jumped 13% in 2021, 14% in 2022 and 9.8% in 2023. This trend can affect Elevance’s margins. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 19.9% year-over-year growth. UHS has witnessed three upward estimate revisions over the past 30 days against one movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 5.9%.
The Zacks Consensus Estimate for Cigna’s full-year 2024 earnings indicates a 13% year-over-year increase. CI beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. The consensus mark for revenues suggests 20.4% growth from the year-ago period.
The Zacks Consensus Estimate for Health Catalyst’s 2024 full-year earnings implies a 113.3% increase from the year-ago reported figure. HCAT beat earnings estimates in each of the last four quarters, with an average surprise of 247.9%. The consensus mark for its current-year revenues is pegged at $308.2 million, which indicates a 4.2% year-over-year increase.
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Why Elevance (ELV) is a Smart Addition to Your Portfolio Now
Elevance Health, Inc. (ELV - Free Report) is strategically poised for growth, driven by increasing memberships in individual commercial risk-based businesses and Blue Card businesses. Improving performance in the Carelon Services business is a significant tailwind for the company.
Elevance, with a market capitalization of $118.6 billion, is a major health benefits company in the United States. Due to solid prospects, this currently Zacks Rank #2 (Buy) stock is worth investing in at the moment. In this analysis, we'll explore the growth drivers and estimates and highlight the key factors investors should monitor.
Let’s delve deeper.
The Zacks Consensus Estimate for ELV’s 2024 earnings is pegged at $37.14 per share, indicating 12.1% year-over-year growth. The company witnessed one upward estimate revision over the past 30 days against no movement in the opposite direction. Elevance beat on earnings in each of the last four quarters, with an average surprise of 3.1%. This is depicted in the figure below.
Elevance Health, Inc. Price and EPS Surprise
Elevance Health, Inc. price-eps-surprise | Elevance Health, Inc. Quote
The consensus mark for 2024 revenues stands at $172.4 billion, suggesting 1.3% growth from a year ago. Headquartered in Indianapolis, IN, Elevance’s top line is poised to capitalize on increasing product revenues, administrative fees and other revenues. Our model predicts more than 5% year-over-year growth in 2024 product revenues, along with a 12.1% year-over-year increase in administrative fees and other revenues.
The company’s shares have gained 11.9% in the past year, outperforming the industry’s 7.6% growth and the Medical sector’s 10.7% increase. Thanks to its strong operations, the stock is expected to sustain its upward trajectory.
Increased premiums from the Commercial Health Benefits business and a growing membership base are expected to drive the company's top-line growth. We expect memberships in Blue Card and individual businesses to witness more than 5% and 16% year-over-year growth, respectively, in 2024. Additionally, the expansion of memberships in dental and vision lines will contribute significantly to this positive trend.
Its Carelon platform continues to grow, thanks to the expansion of CarelonRx pharmacy product revenues, supported by a rise in the number of external pharmacy members served. Enhanced performance in the Carelon Services business is expected to further contribute to profit growth. Additionally, the recent acquisition of Paragon Healthcare, integrated into the CarelonRx pharmacy services unit, is anticipated to strengthen its position in the market.
The Paragon Healthcare acquisition, along with several others in the past, such as BioPlus specialty pharmacy, continue to scale ELV’s Carelon business and enable it to lower costs of care and provide greater choices to the patients. Moreover, ELV strategically divests non-core assets to enhance profitability. With a return on invested capital of 11%, surpassing the industry average of 8.2%, the company demonstrates superior efficiency in generating returns from its capital investments compared to industry peers.
Key Concern
However, there are a few factors that investors should keep an eye on. One, for example, is rising expenses, which jumped 13% in 2021, 14% in 2022 and 9.8% in 2023. This trend can affect Elevance’s margins. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Other Key Medical Picks
Enhancing the array of healthcare options, other promising stocks in the Medical sector include Universal Health Services, Inc. (UHS - Free Report) , The Cigna Group (CI - Free Report) and Health Catalyst, Inc. (HCAT - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 19.9% year-over-year growth. UHS has witnessed three upward estimate revisions over the past 30 days against one movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 5.9%.
The Zacks Consensus Estimate for Cigna’s full-year 2024 earnings indicates a 13% year-over-year increase. CI beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. The consensus mark for revenues suggests 20.4% growth from the year-ago period.
The Zacks Consensus Estimate for Health Catalyst’s 2024 full-year earnings implies a 113.3% increase from the year-ago reported figure. HCAT beat earnings estimates in each of the last four quarters, with an average surprise of 247.9%. The consensus mark for its current-year revenues is pegged at $308.2 million, which indicates a 4.2% year-over-year increase.