Elevance Health (ELV): The Medicaid Overhang Persists —But Is the Market Underpricing Its $34+ EPS Recovery Path?

$50.00 or $120.00 / year

Elevance Health delivered a solid Q4 2024, with revenue of $44.99B, exceeding estimates by $271M, driven by premium adjustments, ACA exchange growth (+30% YoY), and strength in national accounts, offsetting Medicaid disenrollments. Full-year revenue rose 3% YoY to $175.2B, with adjusted EPS of $33.04. Despite a 1.1M membership decline from Medicaid redeterminations, commercial and Medicare Advantage (MA) segments maintained momentum, with MA projected to grow 7-9% in 2025. Medicaid remains a near-term drag, with cost pressures persisting in behavioral health and inpatient services, but management anticipates rate adjustments in H2 2025 to aid margin normalization. Carelon remains a structural growth driver, with Carelon Services set to expand revenue by 50% in 2025, aided by CareBridge integration and PBM share gains. Elevance’s focus on value-based care, digital engagement, and integrated provider solutions enhances long-term differentiation, while disciplined capital allocation supports stability, with $2.9B in share buybacks and a 5% dividend increase. The company’s 2025 guidance projects 3-5% EPS growth ($34.15-$34.85), with H1 earnings skewed due to Medicaid adjustments. While Medicaid cost misalignment remains an overhang, strong execution in Medicare, commercial, and Carelon suggests upside potential. Can Elevance sustain earnings power and drive multiple expansion despite lingering Medicaid headwinds?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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