AI-Enabled Analytics And Value-Based Care Will Ensure Future Stability

Following disappointing Q2 results and a significant EPS guidance cut for 2025, analysts remain cautious on Elevance Health due to earnings uncertainty and operational risks—despite some offsetting segmental strengths and longer-term positives—resulting in an unchanged consensus price target of $368.44.

Analyst Commentary

• Bearish analysts lowered price targets following Elevance Health’s Q2 report, citing a larger-than-expected EPS guidance cut for 2025, lingering questions about the true earnings floor, and persistent volatility in cost trends.
• Weaker-than-expected Q2 results were partially masked by one-time provider settlements and tax factors, leading to increased investor skepticism and a perceived lack of clarity regarding near-term earnings stability.
• Elevated pressure in Medicaid and Health Insurance Exchange segments exceeded market expectations, but some analysts highlight the company’s ability to offset this with growth and stability in Commercial and Carelon segments.
• Some downgrades and neutral ratings reflect concerns about stalled earnings growth into 2026, few meaningful catalysts for multiple expansion or improved sentiment, and heightened, broad-based operational risks across key business lines.
• Despite these headwinds, a subset of bullish analysts remains constructive, viewing the rebased 2025 guidance as a potential clearing event and citing Elevance’s ongoing competitive advantages, scale, and integrated offerings as positives for intermediate- to long-term recovery.

What's in the News

• U.S. judges rejected two constitutional challenges against the Medicare Drug Price Negotiation Program, a decision impacting major health insurers including Elevance Health (The Hill).
• Insurers, including Elevance Health, are seeking double-digit premium increases for 2026 ACA marketplace plans due to rising healthcare costs and policy changes (The Wall Street Journal).
• Prescription drug denials by private insurers, including Elevance Health, have increased from 18.3% to 22.9% between 2016 and 2023, driven by higher drug prices and AI-based claims processing (The New York Times).
• The Supreme Court upheld a key Obamacare provision requiring insurers to cover preventive care at no cost to patients, preserving a core mandate for Elevance Health and peers (Reuters).
• Major insurers such as Elevance Health will implement improved prior authorization processes, pledging standardized electronic submissions and faster response times by 2027, but concerns over barriers to care remain (The Wall Street Journal).

Valuation Changes

Summary of Valuation Changes for Elevance Health

• The Consensus Analyst Price Target remained effectively unchanged, at $368.44.
• The Net Profit Margin for Elevance Health remained effectively unchanged, at 3.23%.
• The Future P/E for Elevance Health remained effectively unchanged, at 12.43x.