Investors are rightly focused on the company's Medicaid struggles, but the real upside story may be hiding in plain sight across the rest of its business.
Elevance Health (ELV) stock has a history of rewarding patient investors, and with a gain of 18.8% over the last three months, it seems to be at it again. But look under the hood and you'll find a glaring issue that has ***** ysts on edge: a Medicaid business projected to run at a negative 1.75% operating margin this year. That's a tough number to ignore.
So, what could possibly drive the stock materially higher from here? The answer may lie in looking everywhere but the segment grabbing all the headlines. The real opportunity is in the market recognizing that the rest of Elevance Health is strong enough to power through the Medicaid drag and deliver on its ambitious growth targets for next year.
A Turnaround Story in Medicare Advantage
For a case study in how Elevance can execute a turnaround, look no further than its Medicare Advantage business. After a period of what management calls "deliberate actions" to reposition the portfolio, the segment is now showing "clear evidence" of "stronger performance." The company is confident it's on a "path to at least a 2% operating margin this year" in that business. This forecast also serves as a proof point. It shows that when management applies disciplined plan design and focuses on a sustainable portfolio, it can deliver results. That's a powerful precedent as it applies the same tough-love approach to its other segments.
#business #story
Elevance Health (ELV) stock has a history of rewarding patient investors, and with a gain of 18.8% over the last three months, it seems to be at it again. But look under the hood and you'll find a glaring issue that has ***** ysts on edge: a Medicaid business projected to run at a negative 1.75% operating margin this year. That's a tough number to ignore.
So, what could possibly drive the stock materially higher from here? The answer may lie in looking everywhere but the segment grabbing all the headlines. The real opportunity is in the market recognizing that the rest of Elevance Health is strong enough to power through the Medicaid drag and deliver on its ambitious growth targets for next year.
A Turnaround Story in Medicare Advantage
For a case study in how Elevance can execute a turnaround, look no further than its Medicare Advantage business. After a period of what management calls "deliberate actions" to reposition the portfolio, the segment is now showing "clear evidence" of "stronger performance." The company is confident it's on a "path to at least a 2% operating margin this year" in that business. This forecast also serves as a proof point. It shows that when management applies disciplined plan design and focuses on a sustainable portfolio, it can deliver results. That's a powerful precedent as it applies the same tough-love approach to its other segments.
#business #story
2 months ago
