Is this “Strong Buy” health insurance company a good deal?

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Elevance Health Inc. (ELV) is a health benefits company. It helps consumers, families and communities along the care journey by connecting them to the care, support and resources they need to lead healthy lives. It provides medical, digital, pharmaceutical, behavioral, clinical and healthcare solutions to approximately 118 million people.

Originally known as Anthem, Inc. (ANTM), the company changed its name to Elevance Health Inc. in June 2022.

In non-GAAP forward P/E terms, the stock is currently trading at 16.97x, 12.6% below the industry average of 19.43x. Additionally, its forward EV/Sales of 0.88x is 75.9% below the industry average of 3.67x. Additionally, ELV’s futures price-to-sales ratio of 0.76x is 82.9% below the industry average of 4.47x.

The stock has gained 26.6% over the past year and 29.2% over the past nine months to close its last trading session at $485.98. The company is well positioned to win in the ever-changing healthcare industry through its various strategic operational advancements.

Here’s what could shape ELV’s performance in the near term:

Strategic acquisition

In May, ELV (formerly known as Anthem Inc.) announced the completion of its acquisition of Integra Managed Care, a New York-based managed long-term care plan that helps people with care needs long-term conditions and disabilities to live safely and independently. in their own homes.

“We are excited to complete this acquisition and to work alongside our new colleagues as we continue to grow our Medicaid business and improve the healthcare experience for all of our members,” said Felicia Norwood, vice president. Executive of Anthem’s Government Affairs Division.

Strong finances

During the first quarter ended March 31, 2022, ELV’s total revenue increased 17.6% year over year to $38.09 billion. The company’s net profit rose 7.7% from the previous year’s value to $1.79 billion, while its EPS stood at $244.4.

Its cash and cash equivalents were $6.16 billion, an increase of 26.3% for the quarter ended March 31, 2022.

Impressive growth prospects

Street expects ELV revenue and EPS to grow 12.3% and 10.2% year-over-year to $153.78 billion and $28.64, respectively , in fiscal 2022. Additionally, ELV’s EPS is expected to grow at a CAGR of 12.6% over the next five years.

Additionally, the company has an impressive track record of earnings surprises, as it has beaten Street EPS estimates for the past four quarters.

Consensus Rating and Price Target Indicate Upside Potential

Of the 20 Wall Street analysts who rated ELV, 16 rated it Buy and four rated it Hold. The 12-month median price target of $568.40 indicates a Upside potential of 16.9%. Price targets range from a low of $335.00 to a high of $642.00.

POWR ratings reflect strong outlook

ELV has an overall rating of A, which equates to a Strong Buy rating in our own POWR Rankings system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary scoring system also rates each stock against eight different categories. ELV has a B rating for Quality, Growth and Value. ELV’s strong earnings and revenue growth potential is consistent with the Quality and Growth rating. Additionally, the lower-than-industry multiples are in line with the Value rating.

Of the 11 A-rated shares Medical – Health insurance industry, ELV is ranked #1.

Beyond what I said above, we rated ELV for Sentiment, Stability, and Momentum. Get all ELV ratings here.

Conclusion

ELV has gained 29.3% over the past month. Its impressive growth attributes and continued efforts to strengthen its operational capabilities should enable it to experience robust growth in the near term. Additionally, as the stock is currently trading at a significant discount to its peers, we believe it might be a good idea to buy back its shares now.

How does Elevance Health Inc. (ELV) compare to its peers?

ELV has an overall POWR rating of A, which equates to a Strong Buy rating. Check out these other stocks in the same sector with A (strong buy) ratings: Cigma Corp. (THIS), UnitedHealth Group Inc. (A H), and Centene Corp. (CNC).


Shares of CI were trading at $260.88 per share on Tuesday afternoon, down $7.15 (-2.67%). Year-to-date, CI has gained 14.64%, versus a -20.25% rise in the benchmark S&P 500 over the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. After…

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