Elevance Health, Inc.
ELV
$375.84
-0.15%
Elevance Health is a leading health insurer in the US, providing medical benefits to 45 million members through employer, individual, and government-sponsored plans. It is the largest single licensee of Blue Cross Blue Shield branded coverage, operating in 14 states, and has expanded into government programs via acquisitions like Amerigroup and MMM. The stock is currently in focus due to a recent sector-wide boost from a larger-than-expected 2027 Medicare Advantage payment increase by CMS, which has improved revenue visibility and sentiment. Additionally, the company is navigating a mixed earnings trajectory, with recent quarterly results showing revenue growth but compressed margins, driving debate around its near-term profitability outlook.…
ELV
Elevance Health, Inc.
$375.84
Investment Opinion: Should I buy ELV Today?
Rating: Buy. Thesis: Elevance Health offers a compelling risk/reward at current levels, with a discounted valuation (trailing P/E 13.92x) and a catalyst from the CMS Medicare Advantage payment increase, while strong free cash flow supports shareholder returns. The consensus analyst rating is Buy (mean 1.77 on 1-5 scale) with an average target of $449.10, implying 18.9% upside.
Supporting Evidence: The trailing P/E of 13.92x is below the industry average of 15-20x, and the forward P/E of 12.74x suggests earnings growth is expected. Revenue growth, while decelerating, remains positive at 1.4% YoY, and the company generates robust free cash flow of $6.29 billion. The dividend yield of 1.97% is well-covered by earnings (payout ratio 27.0%). The analyst consensus is bullish, with 21 analysts rating it Buy and an average target implying significant upside.
Risks & Conditions: The biggest risks are continued margin compression (net margin down to 2.90%) and revenue deceleration. If net margins stabilize above 3.5% and revenue growth re-accelerates above 3%, the stock could re-rate higher. Conversely, if margins fall below 2.5% or revenue growth turns negative, the thesis would be invalidated. Overall, Elevance appears undervalued relative to its history and peers, offering a margin of safety for patient investors.
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ELV 12-Month Price Forecast
The AI assessment is bullish with medium confidence. Elevance's valuation is attractive relative to peers and its own history, and the CMS Medicare Advantage tailwind provides a tangible catalyst. However, margin compression and revenue deceleration warrant caution. The base case of gradual improvement is most likely, with a 50% probability. If margins stabilize, the stock could re-rate toward the analyst average target of $449.10. The key risk is that margin pressure persists, leading to further downside. The stance would be upgraded to high confidence if net margins show sequential improvement in the next quarter, and downgraded to neutral if revenue growth falls below 1%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Elevance Health, Inc.'s 12-month outlook, with a consensus price target around $449.10 and implied upside of +19.5% versus the current price.
Average Target
$449.10
0 analysts
Implied Upside
+19.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$393 - $492
Analyst target range
Elevance Health is covered by 21 analysts, with a consensus recommendation of 'Buy' (mean rating 1.77 on a 1-5 scale, where 1 is Strong Buy). The average target price is $449.10, implying approximately 18.9% upside from the current price of $377.68. The distribution leans bullish, with recent ratings from firms like Truist, TD Cowen, and B of A Securities maintaining Buy or Overweight ratings. The target range spans from $393.00 (low) to $492.00 (high), indicating a spread of $99.00. The high target of $492.00 assumes a return to stronger earnings growth and multiple expansion, potentially driven by the Medicare Advantage tailwind and cost discipline. The low target of $393.00 reflects concerns about margin pressure and competitive dynamics. The relatively wide spread suggests uncertainty about the pace of recovery, but the overall bullish consensus indicates analysts see more upside than downside. Recent rating actions have been stable, with no downgrades noted, reinforcing positive sentiment.
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Bulls vs Bears: ELV Investment Factors
Elevance Health presents a classic value vs. quality debate. On the bull side, the stock trades at a discounted valuation (trailing P/E 13.92x) with strong free cash flow ($6.29B) and a defensive low beta (0.683). The recent CMS Medicare Advantage payment increase provides a tangible catalyst for revenue growth. However, bears point to margin compression (net margin down to 2.90%), slowing revenue growth (1.4% YoY), and a negative PEG ratio that signals earnings headwinds. The single most important tension is whether the company can stabilize and expand margins in the coming quarters. If margins recover, the stock could re-rate higher; if they continue to compress, the valuation discount may be justified. Currently, the evidence slightly favors the bull case given the attractive valuation and strong cash flow, but margin trends remain the key watchpoint.
Bullish
- Attractive Valuation with 18.9% Upside: The stock trades at a trailing P/E of 13.92x and forward P/E of 12.74x, well below the managed care industry average of 15-20x. The average analyst target of $449.10 implies 18.9% upside from the current price of $377.68, suggesting the market is pricing in excessive pessimism.
- Strong Free Cash Flow Generation: Elevance generated $6.29 billion in free cash flow over the trailing twelve months, providing ample capacity for dividends and share buybacks. The dividend yield of 1.97% is supported by a payout ratio of 27.0%, leaving room for future increases.
- Medicare Advantage Tailwind from CMS: A larger-than-expected 2027 Medicare Advantage payment increase from CMS has boosted revenue visibility and sentiment across the managed care sector. Elevance's exposure to government programs positions it to benefit from this multi-year tailwind.
- Low Beta and Defensive Characteristics: With a beta of 0.683, Elevance is significantly less volatile than the broader market, making it an attractive holding for risk-averse investors. The stock has outperformed the S&P 500 over the past year (+34.7% vs +16.5%), demonstrating resilience.
Bearish
- Margin Compression Pressuring Earnings: Net margin declined to 2.90% in Q2 2026 from 3.50% a year ago, while operating margin fell to 4.09% from 5.29%. Net income dropped 16% YoY to $1.46 billion, reflecting higher medical costs and a challenging underwriting environment.
- Revenue Growth Deceleration: Revenue growth slowed to 1.4% YoY in Q2 2026, down from 9.5% in Q4 2025 and 2.6% in Q1 2026. This deceleration raises concerns about the company's ability to sustain top-line momentum amid competitive pressures.
- Negative PEG Ratio Signals Earnings Risk: The PEG ratio of -5.70 is negative due to expected earnings declines, indicating that the market anticipates further earnings contraction. This is a red flag for value investors seeking earnings growth.
- High Short Interest and Uncertainty: The short ratio of 3.32 days to cover suggests elevated bearish sentiment. The wide analyst target range ($393-$492) reflects uncertainty about the pace of margin recovery and competitive dynamics.
ELV Technical Analysis
Elevance Health is in a broad uptrend, with the stock up 34.68% over the past year, significantly outperforming the S&P 500's 16.47% gain. The current price of $377.68 sits at 57.5% of its 52-week range ($273.71–$436.24), indicating it is closer to the midpoint than extremes. This positioning suggests the stock is not overextended but has room to run, though it is below its recent highs, hinting at potential resistance. Short-term momentum shows a mixed picture: the 1-month change is -1.65% while the 3-month change is +9.55%, indicating a recent pullback after a strong rally. This divergence from the 1-year trend could signal a temporary consolidation or profit-taking, rather than a trend reversal, especially given the stock's beta of 0.683, which is lower than the market, implying less volatility. Key support lies near the 52-week low of $273.71, while resistance is at the 52-week high of $436.24. A breakout above $436.24 would signal renewed bullish momentum, while a breakdown below $273.71 could indicate a bearish reversal. The low beta suggests the stock is less volatile than the market, which may appeal to risk-averse investors.
Beta
0.68
0.68x market volatility
Max Drawdown
-30.6%
Largest decline past year
52-Week Range
$274-$436
Price range past year
Annual Return
+32.8%
Cumulative gain past year
| Period | ELV Return | S&P 500 |
|---|---|---|
| 1m | -9.7% | +0.2% |
| 3m | +0.8% | +3.7% |
| 6m | +8.7% | +8.0% |
| 1y | +32.8% | +18.2% |
| ytd | +6.1% | +9.6% |
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ELV Fundamental Analysis
Revenue has shown modest growth, with Q2 2026 revenue of $50.47 billion representing a 1.4% YoY increase from $49.78 billion in Q2 2025. However, the multi-quarter trend reveals deceleration: Q1 2026 revenue was $50.18 billion (up 2.6% YoY from $48.89 billion), while Q4 2025 revenue was $49.75 billion (up 9.5% YoY from $45.44 billion). The Health Benefits segment contributed $42.72 billion and Carelon Services $19.23 billion, with segment eliminations of -$12.13 billion, indicating that the core insurance business remains the primary growth driver, while the services segment is expanding. Profitability has been under pressure: net income in Q2 2026 was $1.46 billion, down from $1.74 billion in Q2 2025, and gross margin contracted to 25.56% from 26.26% a year ago. The net margin fell to 2.90% from 3.50%, reflecting higher costs and a challenging underwriting environment. The company remains profitable, but margin compression is a key concern, especially as the operating margin dropped to 4.09% from 5.29%. Balance sheet metrics show a healthy financial position: debt-to-equity ratio of 0.76 is manageable, and the current ratio of 1.24 indicates adequate liquidity. Free cash flow (TTM) of $6.29 billion is robust, providing ample capacity for dividends and share buybacks. ROE of 12.9% is solid, though down from historical levels, and the company generated $1.91 billion in operating cash flow in Q2 2026, covering capital expenditures of $287 million easily.
Quarterly Revenue
$50.5B
2026-06
Revenue YoY Growth
+1.4%
YoY Comparison
Gross Margin
89.1%
Latest Quarter
Free Cash Flow
$6.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ELV Overvalued?
Given that net income is positive, the primary valuation metric is the P/E ratio. The trailing P/E is 13.92x, while the forward P/E is 12.74x, implying that the market expects earnings growth. The gap between trailing and forward P/E suggests modest earnings expansion is anticipated. Compared to the industry average (not provided, but typically for managed care, P/E ranges 15-20x), Elevance's trailing P/E of 13.92x appears at a discount, potentially reflecting the recent margin compression and slower growth. The P/S ratio of 0.39x is also low, indicating the stock is cheap relative to sales. Historically, the stock's trailing P/E has ranged from roughly 9x to 50x over the past few years. At 13.92x, it is near the lower end of its historical band, suggesting the market is pricing in cautious expectations. This could represent a value opportunity if the company can stabilize margins and return to growth, but it also reflects the current earnings headwinds. The PEG ratio of -5.70 is negative due to negative earnings growth expectations, which is a red flag, but this may be distorted by one-time items.
PE
13.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 9x~35x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
10.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Elevance's primary financial risk stems from margin compression, with net income falling 16% YoY in Q2 2026 to $1.46 billion and net margin contracting to 2.90% from 3.50%. The debt-to-equity ratio of 0.76 is manageable, but the current ratio of 1.24 indicates only adequate liquidity. Free cash flow of $6.29 billion provides a buffer, but if margin pressure persists, the company may need to reduce share buybacks or dividend growth. Revenue concentration in government programs (Medicare, Medicaid) exposes the company to regulatory changes, though the recent CMS payment increase is a positive.
Market & Competitive Risks: The stock's trailing P/E of 13.92x is at a discount to the managed care industry average of 15-20x, but this discount could widen if earnings continue to disappoint. With a beta of 0.683, Elevance is less sensitive to macro swings, but sector-specific headwinds like medical cost inflation and competitive pricing from peers (UnitedHealth, Humana) could pressure margins. The recent CMS announcement has improved sentiment, but any reversal or delay in payment increases would be a negative catalyst. The stock's 52-week range ($273.71-$436.24) shows significant volatility, and the current price near the midpoint suggests room for both upside and downside.
Worst-Case Scenario: In a severe scenario where medical costs spike, margins compress further, and the company guides down earnings, the stock could retest its 52-week low of $273.71. This would represent a 27.5% decline from the current price of $377.68. The analyst low target of $393.00 is above the 52-week low, but if fundamentals deteriorate, the stock could overshoot to the downside. Historical max drawdown of -30.6% suggests a potential loss of up to $115 per share from current levels.
FAQ
The key risks are: 1) Margin compression: net margin fell to 2.90% from 3.50% YoY, and if medical costs continue to rise, earnings could decline further. 2) Revenue deceleration: growth slowed to 1.4% YoY in Q2 2026, and if it turns negative, the stock could de-rate. 3) Regulatory risk: changes to Medicare or Medicaid reimbursement could impact profitability, though the recent CMS increase is a positive. 4) Competitive pressure: rivals like UnitedHealth and Humana could undercut pricing, squeezing margins. The most severe risk is a combination of margin compression and revenue decline, which could drive the stock to its 52-week low of $273.71, a 27.5% downside from current levels.
The 12-month forecast for Elevance Health is moderately bullish. The base case (50% probability) sees the stock trading around the analyst average target of $449.10, driven by stable margins and modest revenue growth. The bull case (30% probability) targets $492.00, assuming margin recovery and the CMS Medicare Advantage tailwind. The bear case (20% probability) sees the stock falling to $393.00 or lower, if margin pressure persists. The most likely scenario is the base case, where the stock appreciates about 19% from the current price of $377.68. Key assumptions include net margin stabilizing above 3.0% and revenue growth of 1-2%. The forecast is supported by a consensus Buy rating from 21 analysts.
Elevance Health appears undervalued relative to both its history and peers. The trailing P/E of 13.92x is below the managed care industry average of 15-20x, and the forward P/E of 12.74x implies the market expects earnings growth. The P/S ratio of 0.39x is also low, indicating the stock is cheap relative to sales. Historically, the stock's trailing P/E has ranged from 9x to 50x over the past few years, so the current level is near the lower end of its historical band. The market is pricing in cautious expectations due to margin compression and slowing growth. If the company can stabilize margins, the stock could re-rate higher. The PEG ratio of -5.70 is negative due to expected earnings declines, which is a red flag, but this may be distorted by one-time items. Overall, the valuation suggests the stock is undervalued, but the discount reflects real earnings headwinds.
Elevance Health appears to be a good buy for value-oriented investors with a medium-term horizon. The stock trades at a trailing P/E of 13.92x, a discount to the managed care industry average of 15-20x, and analysts see 18.9% upside to the average target of $449.10. The company generates strong free cash flow of $6.29 billion, supporting a 1.97% dividend yield. However, the biggest risk is margin compression, with net margin falling to 2.90% from 3.50% a year ago. If you believe margins will stabilize, the current valuation offers a margin of safety. For aggressive growth investors, the decelerating revenue growth (1.4% YoY) may be a turnoff. Overall, it is a buy for those seeking a defensive, undervalued stock with a catalyst from Medicare Advantage.
Elevance Health is best suited for long-term investment due to its defensive characteristics (beta 0.683), stable dividend yield (1.97%), and strong free cash flow. The company's business model as a health insurer provides recurring revenue, and its exposure to government programs offers visibility. Short-term trading is less attractive due to the stock's low volatility and the recent pullback, which may lead to sideways movement. A minimum holding period of 12-18 months is recommended to allow the CMS Medicare Advantage catalyst to materialize and for margins to stabilize. For long-term investors, the current valuation provides a good entry point, with the potential for both capital appreciation and income.
