On Friday, UBS raised its price target on shares of Elevance Health (NYSE: ELV) to $605 from $585, while maintaining a Buy rating on the company's stock.
The adjustment follows Elevance's recent elaboration on its collaborative care delivery relationship (CDR) partnership. The health services provider has provided additional information, highlighting that the new care delivery entity will begin with a significant amount of capitation, as the three provider groups merging into this venture already receive a portion of their revenue through capitated arrangements.
Elevance Health is poised to start the venture with 200 clinics across more than 20 states, with Carelon Health, one of the assets, operating 30 clinics. The company's initial investment details in the partnership were not disclosed, but it has been confirmed that Elevance will begin with a considerable minority stake. Moreover, the company has the option to transition to full ownership within five years.
The company will also hold a strong presence on the board of the new entity, with four out of eleven board seats, which will allow Elevance to influence the business's development with a focus on serving its members.
Despite this, Elevance emphasized that the entity should be regarded as payer-agnostic and operate independently. The partnership is designed to integrate the provider groups, which include Caremore, known for serving a larger portion of complex and chronic patients, many of whom are dual eligibles.
InvestingPro Insights
Following UBS's upgraded price target for Elevance Health, InvestingPro data provides additional context to the company's financial health and market performance. Elevance Health boasts a robust market capitalization of $122.17 billion, reflecting its significant presence in the healthcare industry. With a current P/E ratio of 19.24 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 17.11, the company trades at a premium, which could be justified by its consistent performance and market position. The company's revenue growth remains steady, with a 6.89% increase over the last twelve months as of Q1 2024, indicating a solid business expansion trajectory.
InvestingPro Tips highlight that Elevance Health is not only a prominent player in the Healthcare Providers & Services industry but has also shown commitment to shareholder returns, raising its dividend for 13 consecutive years and maintaining payments for 14 years. This consistency is a positive signal for investors looking for stable income streams. Moreover, the company's share buyback strategy and low price volatility contribute to its attractiveness as a potential investment. For those seeking more insights and tips about Elevance Health, there are additional 12 InvestingPro Tips available, offering a deeper dive into the company's financials and market behavior. To access these insights and enhance your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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