On Friday, Elevance Health Inc. (NYSE:ELV) saw its price target slightly increased from $602.00 to $604.00 by a Jefferies analyst who also reaffirmed a Buy rating on the stock. The analyst's decision comes in light of the company's consistent conservative approach over the last two to three years.
Elevance's medical loss ratio (MLR) outperformed by 40 basis points, despite an increase in deferred care procedures (DCP), medical costs rising faster than premiums, and pressure from Medicaid enrollment. The better-than-expected MLR result was subsequently reinvested into selling, general, and administrative expenses (SG&A) as management chose to defer the benefits from a $750 million cost savings initiative.
The company's partnership with CD&R in Primary Care was also highlighted as adding optionality from full-risk in Primary Care. This strategic move is seen as a potential growth opportunity for Elevance.
The analyst noted that the earnings per share (EPS) setup and valuation for Elevance remain favorable. The endorsement of the Buy rating is grounded in these financial and strategic positives, suggesting confidence in the company's ongoing performance and market position.
InvestingPro Insights
Following the analyst's positive outlook on Elevance Health Inc. (NYSE:ELV), InvestingPro data echoes some of the sentiment with key metrics indicating a robust financial position. The company boasts a substantial market capitalization of $122.17 billion, underscoring its significant presence in the healthcare market. With a P/E ratio of 19.24, which adjusts to a slightly more attractive 17.11 when looking at the last twelve months as of Q1 2024, investors are valuing the company's earnings at a premium, which is further reflected in its price being close to the 52-week high at 97.42%.
Additionally, Elevance Health's commitment to shareholder returns is evident with a notable dividend growth of 27.34% in the last twelve months as of Q1 2024, and a consistent increase in dividend payouts for 13 consecutive years. This is complemented by an InvestingPro Tip highlighting that the company has maintained dividend payments for 14 consecutive years, showcasing a reliable return to investors. Moreover, Elevance's stock generally trades with low price volatility, providing a potentially stable investment option.
For investors seeking further insights, InvestingPro offers additional tips on Elevance Health Inc., including analysis on the company's cash flow capabilities and debt levels. Interested readers can unlock these valuable insights and more by visiting https://www.investing.com/pro/ELV and using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 12 more InvestingPro Tips available, investors can deepen their understanding of Elevance Health's market position and financial health.
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