Bernstein SocGen Group has trimmed its price objective for Elevance (NYSE: ELV) to $409.00 from $431.00, while continuing to rate the health insurer as Outperform. The firm pointed to Elevance’s guidance of $25.50 in adjusted earnings per share for 2025, issued after the company released its fourth-quarter 2025 results, as central to the reassessment.
According to Bernstein, the roughly 5% cut in the price target reflects a lower baseline for 2025 and specific operational headwinds. The analyst cited reduced Medicare Advantage rates and lower membership levels that have affected Carelon businesses as meaningful drags on the company’s near-term earnings outlook.
Bernstein emphasized management’s stated commitment to achieving 12% EPS growth by 2027 as the most consequential takeaway from the investor call, framing that target as an explicit focus on margin recovery. The firm also highlighted what it described as evidence of pricing discipline at Elevance, noting management has accepted lower membership in both Medicare Advantage and commercial lines as part of that strategy.
The analyst note called attention to a continuing contraction in Medicaid membership, which Bernstein said is pressuring the insurer’s risk pool and reducing earnings power for 2025. Even with those pressures, Bernstein expressed an expectation that disciplined pricing actions can help improve margins over time.
Looking further out, Bernstein projects a compound annual growth rate in EPS of 16% from 2026 to 2030, with much of that recovery attributed to improvement in government managed care organization lines.
Elevance’s reported fourth-quarter 2025 financials presented a mixed picture. The company posted adjusted diluted EPS of $3.33, ahead of the $3.10 analysts had expected. At the same time, revenue for the quarter came in at $49.3 billion, below the $49.82 billion forecast. That revenue shortfall prompted a negative response in pre-market trading, according to the analyst commentary, and likely influenced investor sentiment despite the earnings beat.
These results underscore a juxtaposition of stronger-than-expected earnings per share against weaker top-line performance, a combination Bernstein used to recalibrate its near-term assumptions while retaining a positive stance on longer-term earnings recovery.
Key points
- Bernstein lowered Elevance’s price target to $409 from $431 but maintained an Outperform rating.
- The firm cited Elevance’s 2025 EPS guidance of $25.50 and mixed Q4 results - an EPS beat and a revenue miss - as rationale for the adjustment.
- Projected 16% EPS CAGR from 2026-2030 is expected to be driven by recovery in government managed care organization lines; management targets 12% EPS growth by 2027 focused on margin recovery.
Risks and uncertainties
- Reduced Medicare Advantage rates and lower membership at Carelon could continue to depress near-term earnings - affecting health insurance and managed care sectors.
- Shrinking Medicaid enrollment pressures the risk pool and lowers earnings power in 2025 - a risk to government-managed care revenue streams.
- Revenue shortfalls relative to expectations can negatively influence investor sentiment despite earnings beats - impacting insurer stock performance in equity markets.