Our Stock of the Week is Evolent Health. Inc (EVH). “EVH partners with health plans and physicians to achieve better outcomes for people with the most complex health conditions. Working across specialties and primary care, EVH seek to improve the care journey — more connected, higher quality, and more efficient — for patients diagnosed with cancer, cardiovascular diseases, musculoskeletal disorders, and other conditions. Most of the company’s revenue comes from Medicaid and Medicare programs.
EVH has grown revenue by about 45% in each of the last four quarters and has also exceeded analyst expectations in each quarter as well. In the December 2023 quarter, the company saw EPS grow 92% to $0.23 and revenues grow 45% to $556 million. EVH expects EPS growth of 21% in 2024 and 43% in 2025.
The company has nine buy ratings from analysts with an average target price of $46.56, which is 57% above its current price. Last week, Citi initiated a buy on the stock with a target of $40 and stated that Evolent “has firmly found its stride, carving out a nice niche for itself in specialty-focused value-based care.” The firm views the company as a “gentler, kinder way” for health plans to conduct specialty utilization management. Citi thinks payors will take a more aggressive approach to utilization management. to help tamp down costs.
Technically, the stock has pulled back due to weak market conditions and is now sitting at support at its 200-day simple moving average. It may pull back further if poor conditions continue, but earnings will be released on May 9, and there should be some positive anticipation.
As always, we will not chase the stock on Monday but will look to aggressively trade it as it develops further.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing no positions in EVH. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
