Elevance Health (ELV) 2Q26: Medicaid exits increase our confidence in Medicaid turnaround, increasing PT to $488

研报英文原文证据摘录

Elevance Health (ELV) 2Q26: Medicaid exits increase our confidence in Medicaid turnaround, increasing PT to $488

s we adjusted the qtr for a one-time net inv income benefit. Utilization was generally inline with

expectations with outperformance driven by strong pricing discipline. We see the higher Opex spend as intended to manage

expectations and allow for 12+% growth in 2027, and we have seen upside to that implied for 2027. MA outperformed in

the qtr, and appears likely to continue outperformance through the year. Marketplace outperformed in the qtr, although ELV

is assuming seasonality may be a driver, and is not raising guidance on this segment. Carelon strength adds more stability to

results outlook with Services revenue growth and margin trend particularly positive.

ELV stock was down 8.5% as investors were concerned about the limited guidance raise and seemingly interpreted that, along

with the announced exits in Medicaid, as a concern on expected deterioration in Medicaid results. The Medicaid performance

was inline with expectations, but the announcement of market exits we see as a major positive catalyst to increase speed and

conviction of the cycle turnaround. We see ELV conservatism as attempting to protect mgmt credibility, as they seek to remain

capable of responding to future risks in utilization and acuity shift.

Drivers of price target change

We raise our PT to $488 from $482, reflecting roll forward of our model and the benefit of Medicaid exits. We lower our target

price multiple to 14.5x (from 15x prior) and modestly raise our NTM adj. EPS upwards to $33.62 (vs. $32.12 earlier).

We remain Outperform and expect ELV can continue to deploy pricing discipline to improve margins. We see ELV’s D.C. Medicaid