Elevance Health Inc. (ELV) reported a mixed bag of results for its third quarter on Thursday, missing analysts’ earnings expectations despite exceeding revenue estimates. The company’s revenue reached $44.7 billion, a 5.3% increase year-over-year, surpassing the consensus forecast of $43.33 billion. However, profit took a significant hit, falling 21% to $1.02 billion, or $4.36 per share. Adjusted earnings per share reached $8.37, down from $8.99 a year ago and falling short of the consensus estimate of $9.66.
Elevance Health attributed the earnings miss to challenges within the Medicaid business, a key segment for the company. While acknowledging the current difficulties, CEO Gail Boudreaux expressed confidence in the long-term potential of their diverse business portfolio. She stated, “We remain confident in the long-term earnings potential of our diverse businesses as we navigate a dynamic operating environment and unprecedented challenges in the Medicaid business. We expect Medicaid rates will align with the needs of our members in time, and are taking proactive actions to enhance operational efficiencies that will ensure we emerge from this period even stronger.”
In light of the challenges, Elevance Health adjusted its full-year guidance. The company now expects GAAP net income per diluted share to be approximately $26.50, down from the previous guidance of at least $34.05. The adjusted EPS forecast was also lowered to $33.00 from a previous guidance of at least $37.20 and the consensus estimate of $37.26.
The market reacted negatively to the earnings report, sending ELV shares down 3.4% to trade at $429.30 on Friday. Despite the stock decline, several analysts maintained their bullish outlook on Elevance Health.
Cantor Fitzgerald analyst Sarah James kept an ‘Overweight’ rating on the stock but lowered the price target from $600 to $485. RBC Capital analyst Ben Hendrix also maintained an ‘Outperform’ rating, adjusting the price target from $585 to $478. Truist Securities analyst David Macdonald reiterated a ‘Buy’ rating with a reduced price target of $520 from $620. UBS analyst A.J. Rice also kept a ‘Buy’ rating, lowering the price target from $605 to $555.
The analysts’ continued optimism reflects their belief in Elevance Health’s long-term prospects despite the current headwinds. They are confident that the company will overcome the challenges in the Medicaid business and ultimately deliver strong returns for investors. However, it’s important for potential investors to consider the recent earnings miss and the adjusted guidance before making any investment decisions.