4. Elevance Health, Inc. (NASDAQ:ATAI)
Number of Hedge Fund Investors: 79
Elevance Health, Inc. (NASDAQ:ATAI), formerly Anthem, is a major U.S. health insurer with a strong presence across individual, group, and government health plans. Elevance Health, Inc. (NASDAQ:ATAI) is expanding its market reach and improving its services by investing in technology, data analytics, and new products. These efforts have led to significant growth in its membership base and strengthened its competitive position.
In July 2024, Elevance Health, Inc. (NASDAQ:ATAI) acquired BioPlus, a top specialty pharmacy provider, to enhance its pharmacy services and manage complex drug therapies more effectively. Elevance Health, Inc. (NASDAQ:ATAI) also formed a partnership with LifePoint Health to improve access to quality care in rural and underserved areas by integrating its services with LifePoint’s network of hospitals. Additionally, in August 2024, Elevance Health, Inc. (NASDAQ:ATAI) launched Elevance Connect, a digital health platform offering personalized health management tools, virtual care services, and advanced data analytics, further advancing its service capabilities.
Analyst Marcel Knoop maintains a buy rating on Elevance Health, Inc. (NASDAQ:ATAI) despite a modest upside potential of 2%. Knoop is optimistic for two main reasons. First, Elevance Health, Inc. (NASDAQ:ATAI)’s 6% free cash flow yield and its projected growth of mid to high single digits could result in low double-digit returns for investors. He believes that for long-term investors, the stock’s valuation is less critical compared to the potential for future returns. Second, Knoop’s analysis uses conservative growth estimates, meaning there’s a good chance for better-than-expected performance.
Baron Health Care Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q2 2024 investor letter:
“We added to the position in Elevance Health, Inc. (NYSE:ELV), a leading managed care company. We think Elevance Health is well positioned to grow earnings double digits driven in part by its growing health care services business. Managed health care stocks continued to be weighed down by Medicare Advantage utilization and reimbursement concerns. Lack of near-term visibility on utilization trends was exacerbated by the Change Healthcare cyberattack, which disrupted payors’ normal utilization review and claims adjudication processes while new CMS rules are restricting the number of lower cost hospital observation stays in favor of full inpatient admissions. We believe our managed care holdings are likely to perform better in the second half of the year as investors look to 2025.
Elevance Health, Inc., with its more balanced member mix, has its own unique and unappreciated growth drivers which include the ongoing scaling of its PBM and Specialty Pharmacy and the continued growth of its Carelon Services. We note a Republican win in the upcoming election could result in a more favorable environment for Medicare Advantage companies after two years of adverse Medicare Advantage rate updates under the Biden administration.”
