Top 10 Health Insurance Stocks To Buy

4. Elevance Health Inc. (NYSE:ELV)

Number of Hedge Fund Holders: 73

Elevance Health, Inc. (NYSE:ELV), formerly known as Anthem, Inc., is a major health benefits provider in the United States. Anthem Blue Cross, Blue Shield, Wellpoint, and Carelon are among the names under which the firm provides a variety of services, including medical, pharmaceutical, dental, long-term care, disability, and behavioral health insurance.

On February 19, Sarah James of Cantor Fitzgerald confirmed Elevance Health, Inc.’s (NYSE:ELV) Overweight rating and price target of $485. James analyzed the company’s financial performance and its possible susceptibility to changes in Medicaid policy. According to the analyst, Elevance Health, Inc. (NYSE:ELV) operates in 26 states, with Medicaid extended in 18 of them. This expansion covers about 2,055,000 people, or 23% of Elevance’s Medicaid book. However, the potential danger posed by trigger legislation in some states might have an impact on the company’s financial viability, as a drop in Medicaid funding may result in a reversal of expansion benefits.

Artisan Select Equity Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q4 2024 investor letter:

“Elevance Health, Inc. (NYSE:ELV) took a couple of blows this quarter. First, it warned that its Medicaid earnings would come in below expectations this year. The Medicaid business has been in the spotlight as a result of COVID-19. Medicaid rolls filled up during the pandemic, but then rolls started to come down as enrollees lost eligibility when the economy began to normalize. This has made estimating the severity and health trends of the remaining population difficult. So far this year, cost trends have been much worse than expected and are out of line with Elevance’s approved rate structure. Margins in the Medicaid business, therefore, will be down this year, and overall profits are likely to be flat. We believe this is a temporary situation. State Medicaid programs are legally required to pay actuarially sound rates to the providers of Medicaid services, such as Elevance. Rates are expected, therefore, to moveupwardoverthenext12to18months,restoring Elevance’s margins to a more normal level.

The second issue for Elevance is investor sentiment. A mentally deranged young man murdered top executive  of United Healthcare, the largest health insurer in the country. This led to an Internet frenzy of vicious, inaccurate and, frankly, deplorable criticisms of health insurance companies and their executives. Negative and controversial headlines tend to hurt share prices. This was true of Elevance’s stock in the aftermath of this heinous crime. The share price has fallen to extremely attractive levels, trading currently at about 11X earnings. We added to our position during this weakness.”