On Friday, Truist Securities sustained its Buy rating and $33.00 price target for Evolent Health (NYSE:EVH), a company that has been a part of merger and acquisition (M&A) discussions. The commentary from Truist Securities highlighted that while Evolent Health has been familiar with M&A conversations, a leveraged buyout (LBO) might be more suitable than a strategic acquisition by a health insurer due to potential conflicts of interest.
The analysis pointed out that Elevance Health (NYSE:ELV), which also holds a Buy rating from MacDonald, has been proactive in investing in specialty care management and has shown openness to considering M&A to enhance its capabilities. The perspective from Truist Securities suggests that a private equity firm could potentially offer around $35 per share for Evolent Health, yielding a reasonable internal rate of return (IRR) and multiple on invested capital (MOIC).
The firm's assessment also opens up the possibility of a joint partnership between a strategic buyer like Elevance Health and a private equity firm, which could potentially increase the purchase price for Evolent Health. This reflects the current interest in the market for strategic partnerships and investments in the health care management sector.
Truist Securities' valuation of Evolent Health at $33.00 per share remains unchanged, as the firm continues to monitor the company's position and potential in the rapidly evolving health care industry.
InvestingPro Insights
As Evolent Health (NYSE:EVH) remains a topic of merger and acquisition discussions, InvestingPro data provides a deeper look into the company's financial health and market performance. With a market capitalization of $3.68 billion and a striking revenue growth of 44.25% over the last twelve months as of Q2 2024, Evolent Health demonstrates robust expansion in its operations. Despite lacking profitability over the last year, investors have witnessed a substantial return, with the stock price soaring by 54.13% over the past month.
InvestingPro Tips suggest that while net income is expected to grow this year, analysts have tempered their earnings expectations for the upcoming period. Moreover, the stock's recent performance indicates it may be in overbought territory, as suggested by the Relative Strength Index (RSI). For investors seeking a comprehensive analysis, InvestingPro offers additional insights, with 7 more tips available that could help in evaluating Evolent Health's investment potential.
Understanding these dynamics could be particularly relevant for stakeholders considering the company's M&A prospects. The current market valuation and the InvestingPro fair value estimate of $36.46 indicate that the suggested offer price of around $35 per share by a private equity firm, as mentioned by Truist Securities, aligns closely with market assessments. This information might be a valuable resource for investors as they navigate the evolving landscape of the health care management sector.
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