Elevance Health is getting dragged. On July 18, 2025, $ELV dropped another 6.18% intraday, trading at $283.76 with volume pushing past 5 million shares. That’s the lowest print since early 2021 and marks a 50% drawdown from its September 2024 high of $567.26. The selloff accelerated after the company slashed full-year EPS guidance to $30.00 and reported Q2 adjusted EPS of $8.84, down 14.2% year-over-year. Medical cost ratio jumped to 88.9%, up 260 basis points. Medicaid and ACA plans are bleeding margin. The tape didn’t wait.
This is still a $64.1 billion company with 45.6 million medical members and $49.4 billion in Q2 revenue. Carelon, its health services arm, posted 36% revenue growth and 25% gain in operating income. Pharmacy scripts rose 6.5% to 83.3 million. Operating cash flow hit $2.1 billion for the quarter. Dividend yield is 2.26%. Return on equity is 17.7%. Return on invested capital is 11.88%. The business is intact. The chart isn’t.
Valuation is compressed. Forward P/E sits at 8.7x. Price-to-sales is 0.37. Total yield including buybacks is 6.8%. Morningstar pegs fair value at $507. Analyst consensus target is $481.87, implying 69.8% upside. UBS cut its target to $484 but kept a buy rating. Twelve out of sixteen analysts still rate it a buy.
Bullish case leans on scale, cash flow, and long-term contracts. Medicaid redeterminations are temporary. ACA cost spikes are cyclical. Carelon is growing faster than the core insurance business. AI tools are streamlining prior authorizations. Over half of electronic requests are now processed in real time. Operating expense ratio dropped 140 basis points to 10%. That’s margin discipline.
Bearish case centers on utilization mismatch and regulatory pressure. Medicaid and ACA plans are running hot. EPS guidance was cut 14%. Lawsuits are stacking. Short interest is rising. The tape is broken. Trend is down. Leerink Partners downgraded the stock and slashed its target to $310 from $510. At least seven other firms issued bear notes.
Retail sentiment is cold. Institutions are watching UnitedHealth’s earnings on July 29 for sector readthrough. $ELV is on the watchlist, not the buy list. The numbers are solid. The trend is not.
Sources:
https://www.elevancehealth.com/newsroom/elv-quarterly-earnings-q2-2025
https://finviz.com/news/107009/elevance-health-elv-stock-trades-down-here-is-why
https://finance.yahoo.com/news/elevance-health-inc-elv-q2-070701475.html