Anthem Is A Strong Buy For The Long Term

Jan. 16, 2019 11:10 AM ETElevance Health, Inc. (ELV)2 Comments
Kyle McCloskey profile picture
Kyle McCloskey


  • Anthem stands poised to benefit from an increased consumer base along with a projected increase in government healthcare spending.
  • Past and present innovations suggest this company will be able to stay ahead of the curve in the long run.
  • Both the relative and future cash flows models project a stock price that shows Anthem is currently undervalued.
  • Strong financials but upcoming legal battle and potential repeal of ACA provide cause for concern.

Investment Thesis

After the share price dropped 50 points in the last month, right now presents a great entry point into Anthem (NYSE:ANTM). An increasing new consumer base along with financial models that suggest the stock is undervalued lead me to this position.


Anthem Inc (ANTM) is a holding company that offers a plethora of healthcare plans to employers and individuals as well as medicare and medicaid markets which serve 40 million americans. The company offers an array of insurance products under its umbrella including managed care services, and dental, vision and life insurance that make it a potential one stop shop for insurance needs. Ranked 29th in the Fortune 500 as well as #4 among healthcare providers, Anthem can be considered an industry leader.

Expanding Consumer Base

The healthcare industry as a whole is expected to see an increase in their consumer base for 2019 and beyond. The expansion and improvement of government healthcare policies such as medicaid and medicare will help drive continued growth in this industry. For example starting this year the seniors enrolled in the Medicare Advantage plans (approximately 36%) will enjoy new and more flexible healthcare offerings. This helps healthcare providers because instead of the more relatively broad plans they would offer those enrolled in medicaid, now they can choose what type of benefits they are willing to offer. There are three segments in the new medicaid advantage plans: basic supplemental benefits, targeted supplemental benefits, and chronic care supplemental benefits. With one of the biggest market caps in the industry I'd expect Anthem to be a big player in all three segments as it is already a leader with medicare advantage plans. Although President Trump has mentioned the idea of cutting spending with medicare and medicaid, the amount of government spending is planning to increase from a projected $800 billion in 2019 to

This article was written by

Kyle McCloskey profile picture
Current student at SUNY Oswego. Member of the SUNY Oswego Investment Club. I am currently trying to obtain a B.S. in Finance.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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