Elevance Health (ELV) Plunges 8.38% on Earnings Miss, Analyst Downgrade

Elevance Health (ELV) shares plummeted 8.38% today, marking the second consecutive day of decline, with a total drop of 19.58% over the past two days. The stock price hit a record low, experiencing an intraday decline of 8.61%.

The strategy of buying ELV shares after they reach a recent low and holding for one week resulted in a significant underperformance. The strategy returned -45.37% over the past five years, while the benchmark return was 58.03%. The strategy had a maximum drawdown of 0% and a Sharpe ratio of -0.80, indicating a high risk and a negative return relative to the benchmark.

Elevance Health's recent stock decline can be attributed to several key factors. The company, along with other managed care providers, faced a significant setback due to an analyst downgrade and a lost lawsuit concerning Medicare bonus payments. This legal defeat and the subsequent downgrade by analysts have raised concerns about the company's future performance and financial stability.

Adding to the pressure, Wells Fargo lowered its price target for Elevance Health from $478 to $400, citing uncertainties in margins. This reduction in the price target reflects growing concerns about the company's ability to maintain profitability in the face of rising costs and operational challenges.

Elevance Health also reduced its 2025 earnings forecast due to unexpected challenges in its Medicaid and Affordable Care Act (ACA) operations. These operational hurdles have exerted additional pressure on the stock price, as investors reassess the company's financial outlook and growth prospects.

Broader market sentiment, including concerns about rising costs and inadequate pricing for 2025 plans among health insurers, has also contributed to the downward pressure on Elevance Health's stock. The overall market environment, characterized by uncertainty and volatility, has further exacerbated the company's stock decline.

Elevance Health's Q2 2025 earnings report highlighted both positive and negative aspects. While the company reported a revenue increase, it also missed its earnings target by $0.23 and faced numerous negative EPS revisions over the past year. These financial results have impacted investor confidence, leading to a sell-off in the stock.