ELV Stock Forecast & Price Target

Elevance Health's positive outlook is bolstered by its growth in marketplace membership, which is anticipated to slightly outpace market trends, alongside expectations of expanding Medicare Advantage (MA) membership that aligns with an industry growth of approximately 6%. The company's management has expressed confidence in achieving a long-term earnings per share (EPS) compound annual growth rate (CAGR) of at least 12% through 2027, which is believed to be supported by anticipated Medicaid rate adjustments and the strategic integration of Carelon with Health Benefits. Furthermore, Elevance is targeting a significant shift towards value-based care, aiming to have 80% of its consolidated medical spend in such arrangements by 2027, thereby positioning itself for sustained growth in both top-line and bottom-line performance.

Elevance Health has encountered significant headwinds, particularly regarding Medicaid operations, leading to a reduction in the company's guidance for 2024 earnings per share (EPS) and a lowered growth expectation for 2025, now projected at mid-single digits, down from over 12%. The company's stock experienced a notable decline of 10.6% following disappointing third-quarter results that revealed an exacerbation of Medicaid acuity issues and unfavorable intra-year developments, which affected membership growth and increased benefit costs. Furthermore, the proportion of Elevance's Medicare book that is bonus-eligible decreased from 49% to 40%, contributing to an estimated $80 million headwind, which warranted a revision of the 2025 adjusted EPS estimate to $34.63, down from $41.77.