12:20 PM EDT, 07/18/2024 (MT Newswires) -- Elevance Health ( ELV ) reported better-than-expected Q2 results and reiterated its 2024 financial forecast, overcoming a double-digit decline in memberships for Medicaid plans, although that did little to allay concerns by investors, or BofA Securities analysts about its future prospects.

BofA analysts on Thursday lowered their stock rating for the health benefits company to neutral from buy and also reduced the price objective for Elevance shares to $530 each from $646 previously, citing a "cloudy" outlook for Medicaid reimbursements and recent valuation declines for its peer companies.

BofA said Elevance management is grappling with incremental Medicaid pressure like United Health (UNH), making it difficult to determine when and how deep their respective margins will bottom out or the timing of a likely rebound. Those uncertainties already have "dramatically" undercut share prices for rivals like Cigna (CI), Centene (CNC) and Molina Healthcare (MOH), limiting any potential upside for Elevance despite a premium based on its diversification and quality.

Investors also contributing to downward pressure for health care providers by pricing in a possible change in presidential administrations by voters later this year, further restricting exchange and Medicaid growth, BofA said.

"We believe (Elevance) either needs to show it can take market share in Medicare Advantage sustainably, or prove out its Carelon Services business at scale, both of which would take time to build out, in our view."

Elevance shares were down nearly 4% in recent trading.

Price: 502.24, Change: -18.69, Percent Change: -3.59