Analyst Recommendation Overview
TD Cowen has issued a “Buy” rating on three U.S. healthcare‑focused companies—Elevance Health, Encompass Health, and DaVita—highlighting them as its top picks for the third quarter.
Elevance Health (ELV)
The firm assigns a price target of $465 to Elevance Health and expects the company to beat third‑quarter consensus earnings, with management indicating that earnings per share (EPS) are tracking ahead of prior outlook and that July‑August trends support guidance. TD Cowen’s model projects 2026 EPS of $27.25, modestly above the company’s “at least $27” guidance, and forecasts 2027 EPS of $30.02, representing a 14% increase from the roughly $26 baseline. The analysts cite diversification across Medicare Advantage, Medicaid, Commercial/ACA, and the Carelon platform as supportive factors, while noting that the consensus medical loss ratio (MLR) development is among the least conservative in the peer group.
Encompass Health (EHC)
Encompass Health receives a $140 price target and a “Buy” rating. The coverage describes the company as one of the cleanest stories, emphasizing strong organic growth prospects and the absence of exposure to Medicaid or ACA exchange headwinds. Analysts anticipate a robust demand backdrop for inpatient rehabilitation, potential upside in net revenue per discharge, and continued expense management that could drive an EBITDA beat. Recent management meetings have increased confidence that second‑half results will meet or exceed consensus, with same‑store discharge growth expected to accelerate, particularly in the fourth quarter. The note cautions that long positioning may be more crowded than earlier in the year.
DaVita (DVA)
DaVita is upgraded to “Buy” with a $220 price target. The analysts argue that DaVita’s market position is improving relative to its largest competitor and that the company is poised to capture additional share. Results from the MOTheR trial are highlighted as opening a new care modality that could boost volume growth without significant equipment investment. The consensus view is out of favor, with 55% of the Street rating the stock Hold or Sell. TD Cowen estimates third‑quarter operating income of $540 million, slightly below the consensus estimate of $542 million, and flags ACA exchange headwinds as the primary risk to both the quarter and full‑year guidance.
Overall Implications
The three stocks are positioned as the analyst’s preferred healthcare exposure for Q3, each supported by distinct growth catalysts—Elevance’s diversified payer mix and EPS upside, Encompass’s strong rehab demand and cost discipline, and DaVita’s clinical trial‑driven volume expansion. Risks highlighted include potential crowding in long positions for Encompass and regulatory/market headwinds for DaVita.