UnitedHealth vs. Elevance: Which Healthcare Stock Has More Upside?
UnitedHealth Group Incorporated UNH and Elevance Health, Inc. ELV are two of the largest healthcare plan providers in the U.S. market. Both operate at a massive scale, with strong reputations, diversified healthcare offerings and solid financial track records. They are also among the most widely held stocks in the healthcare sector, frequently seen as defensive plays in volatile markets.
The health maintenance organization space has been under pressure in recent quarters due to rising costs and reimbursement uncertainties. However, the long-term outlook remains promising, especially with the growing demand for managed care services. As investors seek stability and growth, UNH and ELV are natural contenders.
Let's dive deep and closely compare the fundamentals of the two stocks to determine which one holds more promise now.
The Case for UnitedHealth
UnitedHealth is the industry's juggernaut, with unmatched scale across insurance and health services through its Optum unit. It's a consistent performer, with decades of earnings growth and a history of prudent capital allocation. The company's size offers negotiating leverage and operational efficiency, supporting its ability to weather macroeconomic pressures.
However, things are not going smoothly for the company at the moment. Following some major events since early last year, the stock's market cap declined from $566.7 billion on Nov. 8, 2024, to $269.1 billion currently.
In its most recent quarter, UnitedHealth missed both the earnings and revenue estimates due to lower-than-expected premiums and elevated medical costs, caused by growing utilization. It also withdrew its 2025 financial guidance. This has raised concerns about near-term earnings volatility.
The company also announced a significant leadership change: CEO Andrew Witty, who took the role in 2021, is stepping down, with former CEO Stephen Hemsley returning to lead. Adding to the turmoil, the Wall Street Journal reported that UnitedHealth is facing a criminal investigation related to potential Medicare fraud. These developments have only deepened investor concerns and accelerated the stock's decline.
Still, UnitedHealth's broad diversification, across commercial insurance, Medicare Advantage, Medicaid, and Optum's data-driven services, gives it a strong buffer against sector-specific risks. It also benefits from consistent free cash flow and a commitment to shareholder returns through dividends and buybacks. Its dividend yield of 2.83% is higher than ELV's 1.78%.
The Case for Elevance
Elevance Health may be smaller in size, but it's showing sharper operational momentum. ELV has increasingly streamlined its business mix and has doubled down on execution, particularly in government-backed plans like Medicaid and Medicare Advantage.
In its latest quarterly report, the company beat estimates on both top and bottom lines thanks to rising premiums, investment income and product revenues. Additionally, it reaffirmed its full-year outlook, despite growing concerns over rising medical costs in the industry, something UnitedHealth has not done amid similar sector dynamics.
Elevance Health, Inc. Price, Consensus and EPS Surprise
Its premiums increased 14.5% year over year to $40.9 billion in the first quarter. ELV's operating expense ratio improved 70 bps year over year to 10.9%, which is better than UNH's 12.4% recorded in the March quarter. Elevance witnessed growth in Medicare Advantage and Individual ACA memberships in the quarter. UNH's UnitedHealthcare business, meanwhile, is dependent on self-funded commercial benefits memberships.
Elevance's long-term debt to capital of 39.7% is lower than UnitedHealth's 42.7%, indicating less usage of leverage, which typically means lower interest obligations and less vulnerability to a high-interest-rate environment.
How Do Zacks Estimates Compare for UNH & ELV?
Zacks Consensus Estimates favor Elevance at this stage. ELV has seen upward revisions in EPS estimates for the current year, while UNH has witnessed multiple downward revisions. The consensus estimate for ELV's 2025 earnings indicates a 4.2% increase from a year ago, while the same for revenues predicts 11.2% growth. On the other hand, the Zacks Consensus Estimate for UNH's 2025 revenues indicates 12.9% year-over-year growth, but the same for EPS signals a 15.5% decline.
Valuation: UNH vs. ELV
Valuation also favors ELV. While UNH trades at a forward P/E of 11.76X, ELV trades at a more modest 10.60. This valuation gap gives Elevance a more attractive risk-reward profile. In contrast, UNH's premium pricing could limit near-term upside unless it delivers clear margin improvements.
Price Performance Comparison
Over the year-to-date period, ELV shares have gained 4.2%, outperforming the industry and the S&P 500 Index's decline, supported by stronger earnings momentum and clearer guidance. Meanwhile, UNH faced selloffs tied to medical costs and investigation concerns. Its shares plunged 41.4% during the same time.
Conclusion
Both UnitedHealth and Elevance Health are blue-chip names with solid track records. UnitedHealth offers scale and diversification, but faces short-term challenges with care costs and margin pressures. Elevance, meanwhile, is showing stronger execution, tighter cost control, and a cleaner growth narrative.
With a more attractive valuation, favorable earnings revisions, and better price performance, Elevance Health stands out as the health insurer with more upside right now. The company currently has a Zacks Rank #3 (Hold), while UnitedHealth carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
Elevance Health, Inc. (ELV): Free Stock Analysis Report
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