ELV

In a comparison of two Medical Services sector stocks, Elevance Health (ELV) emerges as the better value opportunity compared to Revvity (RVTY). ELV holds a Zacks Rank of #2 (Buy) with a Value grade of A, supported by a lower forward P/E ratio of 16.37 and a PEG ratio of 2.32. RVTY, ranked #3 (Hold) with a Value grade of C, has a higher forward P/E of 29.35 and PEG ratio of 2.86, making it less attractive to value investors.

Elevance Health raised its 2026 earnings baseline to at least $26.75 per share, driven by favorable claims in Individual ACA plans and improved full-year outlook. The company's Carelon healthcare services unit reduced avoidable hospital admissions by 15% through targeted cancer care programs, while integrated pharmacy and medical coverage is generating member savings of up to $100 per month. Management expects broad-based operating improvements to continue into future periods, positioning the company for sustainable long-term earnings growth.

Elevance Health (ELV) has reached a new 52-week high of $440.67, up 9.4% over the past month and 25.6% year-to-date, outperforming its sector. The company has a strong earnings track record with a recent beat of $6.99 EPS versus $4.66 consensus estimate. With a Zacks Rank #2 (Buy), Value Score of A, and reasonable valuation metrics, analysts suggest the stock still has room to run despite recent gains.

Elevance Health reported Q3 2026 adjusted EPS of $6.99, significantly beating estimates by 50%, with revenue reaching $50.4B. The Carelon segment drove growth with 5.4% revenue increase and 17.2% operating gain growth. The company raised its 2026 adjusted EPS guidance to at least $29.00 and increased its earnings baseline to at least $26.75.

Humana (HUM) reported 25% YoY premium growth in H1 2026 driven by Medicare Advantage membership expansion, with Insurance and CenterWell segments growing 24.5% and 21.2% respectively. However, the company faces headwinds from a 180 basis point increase in benefit ratio to 90.2% and a 26.1% surge in operating expenses. Competitors Elevance Health and Centene are also navigating challenges with elevated medical costs and declining government-sponsored membership.

Elevance Health reported quarterly earnings of $6.99 per share, significantly beating the consensus estimate of $4.66 and representing a 50% earnings surprise. The health insurer also exceeded revenue expectations at $50.44 billion.

The stock has gained 22.7% year-to-date, outperforming the S&P 500's 12.4% gain. However, the Medical Services industry ranks in the bottom 34% of Zacks industries, which could impact future performance.

Elevance Health is projected to report Q3 2026 earnings on October 21, 2026, with consensus estimates showing a 22.7% year-over-year EPS decline to $4.66 per share and a 3% revenue decrease. The company faces challenges from declining premiums (-4.9%), reduced Commercial Individual and Medicaid membership, and a significant 23.9% plunge in Health Benefits operating income. Despite these headwinds, total expenses are expected to decline 5.5%, providing some offset.

Nutex Health and Elevance Health are recommended as undervalued healthcare stocks despite strong year-to-date performance. Nutex, a small-cap hospital operator, trades at less than 9x trailing earnings with exceptional EPS growth of 2,785% year-over-year. Elevance, a major health insurer, trades at a forward P/E of 14.52 below its five-year average, with consistent dividend increases and strong earnings guidance for 2026-2027.

Elevance Health (ELV) has gained 8.9% year-to-date, outperforming the Medical group's 0.2% average gain, with a Zacks Rank #2 (Buy) rating and improving analyst sentiment. American Well Corporation (AMWL) has significantly outperformed with a 161.1% year-to-date return and also holds a Zacks Rank #2 (Buy) rating with increased consensus EPS estimates.

Centene Corporation will launch its National Performance-Based Gold Card Program nationwide in November 2026, covering over 160,000 providers and allowing qualifying providers to bypass prior authorization for eligible outpatient services. The initiative aims to reduce administrative burden and processing costs while maintaining clinical oversight. Centene trades at 13.13x forward earnings with 2026 EPS estimated to grow 135.1% to $4.89, though the stock carries a Zacks Rank #4 (Sell) rating.

Oscar Health raised its 2026 operating earnings guidance to $500M-$700M from $250M-$450M, driven by improved medical loss ratios (75% from 83%), disciplined pricing, and technology-driven expense efficiency. However, the company faces headwinds in the second half including 2%-4% monthly churn, rising medical costs, and open-enrollment spending. Revenue guidance remained unchanged at $18.7B-$19B.

Oscar Health (OSCR) demonstrates impressive growth with Q2 revenues surging 70.4% to $4.9 billion and membership jumping 46.2% to 2.96 million, significantly outpacing a contracting ACA market. However, the stock trades at a premium valuation of 5.5X tangible book value versus the sub-industry's 1.2X, leaving limited room for disappointment. Execution risks include rising churn rates, increasing medical costs, and favorable reserve items that may not repeat, though the company maintains a strong capital base of $10.2 billion.

Oscar Health (OSCR) shares have gained 14.9% over three months, driven by 46.2% year-over-year membership growth to 2.96 million members and improved medical economics. The company's medical loss ratio improved to 75% from 83%, while SG&A expenses fell to 14.7% from 17.2%, supported by technology efficiencies. However, the stock faces headwinds from ACA market contraction and a valuation that already reflects higher expectations.

CVS Health demonstrates attractive valuation and improving business performance, with Aetna's margin recovery gaining momentum and pharmacy segment showing strong prescription volume growth. However, 340B program pressures and expected Caremark membership declines pose near-term challenges. The stock trades at a discount to peers and has outperformed its industry, though technical indicators suggest weaker momentum.

Centene Corporation (CNC) has surged 57% year-to-date, outperforming peers and the broader market, driven by improving Medicaid margins and strengthened Marketplace profitability. The company raised 2026 adjusted EPS guidance above $4.80, though approximately 50 cents per share will not recur in 2027. Trading at 12.34X forward earnings below industry average, CNC carries a Hold rating as investors await evidence that margin gains can sustain into 2027 amid risks including membership losses and policy exposure.

UnitedHealth Group heads into Q3 earnings with focus on whether its Q2 medical cost improvements can be sustained. The company improved its medical cost ratio to 86.7% in Q2, though $860 million in favorable reserve development aided results. Key questions include whether underlying medical costs remain stable and whether UnitedHealth can improve Medicare Advantage margins while managing expected membership losses of roughly 1.1 million members in 2025.

Dr. Aaron L. Schwartz, an assistant professor at the University of Pennsylvania, has been awarded the 2026 AJMC Seema S. Sonnad Emerging Leader in Managed Care Research Award for his groundbreaking work on low-value care metrics and prior authorization research. His claims-based measures have been adopted by CMS for accountable care programs, and his research has influenced policy decisions at major healthcare organizations and government agencies.