What Happened?
Shares of health insurance provider Elevance Health (NYSE: EVH) fell 11.4% in the morning session after industry peer UnitedHealth reported a significant drop in quarterly earnings and projected a revenue decline for 2026, creating concerns about rising medical costs for the entire sector.
UnitedHealth, a major player in the industry, announced that its net earnings fell sharply to $218 million in the fourth quarter from $2.8 billion in the same period a year ago. This news sparked worries about the health of the broader insurance market. The concerns specifically extended to competitors like Elevance Health, as reports noted it was expected to have a high medical care ratio, topping 92% in the fourth quarter. A high ratio suggests that a larger share of premiums was spent on medical claims, which can squeeze profits for insurers.
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What Is The Market Telling Us
Elevance Health’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Elevance Health and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 3% on the news that Wolfe Research upgraded the stock's rating to Outperform from Peerperform and set a price target of $425.
The research firm cited a "compelling path forward" for the health insurer. Wolfe Research believed its 2026 estimates established a likely bottom in numbers for Elevance, which it viewed as the first step in improving sentiment for the company. The firm also identified several potential growth areas, including Medicare Advantage and Medicaid. Adding to the positive sentiment, Wells Fargo also raised its price target on the stock to $424 from $403 while maintaining an 'Overweight' rating.
Elevance Health is down 7.1% since the beginning of the year, and at $329.18 per share, it is trading 27.3% below its 52-week high of $452.69 from April 2025. Investors who bought $1,000 worth of Elevance Health’s shares 5 years ago would now be looking at an investment worth $1,134.
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