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Morgan Stanley Designates Health Insurance Stock as Top Pick, Predicts Over 20% Upside Potential

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Elevance Health: A Top Pick for Investment with Strong Growth Potential

Morgan Stanley Lists Elevance Health as a Top Pick

Morgan Stanley has identified Elevance Health as a top pick for investors in the managed care industry. The bank has reiterated an overweight rating on the stock and set a price target of $585, implying a 24% upside from the previous close. According to Morgan Stanley analyst Michael Ha, Elevance Health stands out as a clean and high-quality choice in the managed care sector, with significant potential for long-term earnings growth. Despite a YTD slump of more than 8%, the bank believes that the company's fundamental growth story has improved over the past year.

Positive Outlook for Earnings Growth

Morgan Stanley projects a potential 15% growth in earnings per share for Elevance Health in the coming year. This optimistic outlook is based on the company's strong positioning in the broader field of managed care. Ha believes that Elevance Health has attractive and underappreciated long-term earnings growth drivers, making it a favorable investment choice for investors seeking growth potential in the healthcare sector.

Benefits from Higher Commercial Pricing

Another factor that works in favor of Elevance Health is the expected increase in commercial pricing in the sector. Morgan Stanley forecasts that this could contribute up to 175 basis points of margin improvement by 2024. With early indications pointing towards a strong commercial pricing environment across the industry, Elevance Health is well-positioned to benefit from next year's robust commercial rate environment. This also reduces the risk of membership attrition for the company, as price hardening is expected industry-wide. In conclusion, Elevance Health is viewed as a promising investment opportunity by Morgan Stanley. With its strong growth potential, improved fundamentals, and the potential for increased commercial pricing, the company has the potential to deliver significant returns for investors in the managed care industry.

Hot Take: Elevance Health Presents Exciting Opportunities for a New Business

Elevance Health's recognition as a top pick by Morgan Stanley in the managed care industry signals significant growth potential and offers valuable insights for a new business looking to enter the healthcare sector. The positive outlook for Elevance Health's earnings growth and the benefits from higher commercial pricing present compelling reasons to consider this industry segment. For a new business, this endorsement from Morgan Stanley can serve as an indicator of the potential success and attractiveness of venturing into the managed care industry. By capitalizing on the underappreciated long-term earnings growth drivers, a new business can establish a strong position and tap into the market's growth potential. Moreover, the expected increase in commercial pricing presents an opportunity for a new business to enter the market at a time when favorable pricing conditions are anticipated. This can help mitigate the risk of membership attrition and enhance profit margins. By strategically aligning pricing strategies with the forecasted pricing environment, a new business can position itself as a competitive player in the field. Additionally, the glowing review and price target set by Morgan Stanley instill confidence in potential investors and partners. The bank's endorsement can attract attention and support from potential stakeholders, providing a boost to a new business's credibility and capital-raising efforts. In conclusion, Elevance Health's strong growth potential and positive market outlook provide an exciting landscape for a new business considering entry into the managed care industry. By leveraging the established and underappreciated growth drivers, capitalizing on the expected commercial pricing improvements, and benefiting from Morgan Stanley's endorsement, a new business has the chance to thrive in this promising sector. Article First Published at: https://www.cnbc.com/2023/07/25/morgan-stanley-names-this-health-insurance-stock-a-top-pick-sees-more-than-20percent-upside.html

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