Elevance Health, Inc.
ELV
$404.31
+1.05%
Elevance Health, Inc. is one of the largest health insurers in the United States, providing medical benefits to approximately 45 million members across employer, individual, and government-sponsored plans, and operating as the largest single licensee of the Blue Cross Blue Shield brand in 14 states. The company is differentiated by its dual-engine model: a massive Health Benefits segment (roughly $42.7 billion in quarterly revenue) paired with Carelon, a fast-growing healthcare services and pharmacy benefit management platform (roughly $19.2 billion) that cross-sells into both Elevance's own membership base and third-party payers. The current investor narrative centers on the durability of government-program economics — particularly Medicaid redetermination headwinds and Medicare Advantage rate dynamics — against the margin-accretive mix shift toward Carelon services. Sentiment received a sector-wide boost in April 2026 when CMS announced a larger-than-expected 2027 Medicare Advantage payment increase, improving revenue visibility across managed care, though Elevance's subsequent quarterly results showed only modest 1.4% year-over-year revenue growth, keeping the debate focused on cost trend management and the pace of Carelon's margin contribution.…
ELV
Elevance Health, Inc.
$404.31
Related headlines
Investment Opinion: Should I buy ELV Today?
The synthesized recommendation is Hold with a value bias. The core thesis is that Elevance offers a compelling deep-value opportunity — trading at 13.08x forward earnings with a 1.97% dividend yield and analyst consensus target of $451.38 implying +16.8% upside — but the 1.4% revenue growth and year-over-year margin compression mean the stock lacks a near-term catalyst to force a re-rating. The analyst consensus rating of "buy" with a recommendation mean of 1.82 (where 1.0 is a strong buy) reflects confidence that the de-rating has run its course, but the stock's recent 7.53% three-month decline shows the market is not yet convinced.
Supporting evidence for the Hold rating includes: (1) valuation at 13.92x trailing and 13.08x forward earnings is near multi-year lows, down from 35.2x in Q4 2022; (2) price-to-book of 1.77x is below the 2.0–3.0x range the stock commanded in 2022–2023; (3) the 1.97% dividend yield with a 27.0% payout ratio is comfortably funded by $6.289 billion in trailing-twelve-month free cash flow; (4) even the lowest analyst target of $393.00 sits above the current price, suggesting a valuation floor; and (5) Carelon Services generated $19.225 billion in Q2 2026 revenue, providing a margin-accretive growth engine distinct from the stagnant core insurance book. However, the 25.56% gross margin and 2.84% net margin are structurally thin, and the 1.4% revenue growth is well below the estimated revenue growth implied by analyst estimates of $230.557 billion for the coming year.
The biggest risks that could invalidate the thesis are: (1) medical cost trend accelerating beyond current expectations, compressing margins below Q4 2025 levels; (2) 2027 Medicare Advantage rate updates disappointing despite the April 2026 CMS boost; and (3) continued Medicaid redetermination headwinds reducing membership and revenue. This Hold would upgrade to Buy if the forward PE compresses below 12x while revenue growth stabilizes above 3%, or if Carelon's margin contribution accelerates meaningfully. It would downgrade to Sell if revenue growth turns negative or if net margin falls below 2%. Relative to its own history and peers, ELV appears undervalued on a multiple basis, but the market is pricing in persistent headwinds — the stock is cheap for a reason, and the burden of proof is on management to demonstrate margin stabilization.
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ELV 12-Month Price Forecast
Elevance presents a classic deep-value setup: a 13.08x forward PE, 1.77x price-to-book, and a 1.97% dividend yield, all near multi-year lows, with analyst targets implying double-digit upside. However, the 1.4% revenue growth and year-over-year margin compression mean the stock lacks a near-term catalyst to force a re-rating, and the recent 7.53% three-month decline shows the market is not yet convinced. The base case (55% probability) assumes modest growth and stable margins, keeping the stock range-bound between $393 and $451. I would upgrade to bullish if Q3 2026 earnings show net margin above 3.5% and revenue growth accelerating above 3%, or if Carelon's margin contribution accelerates meaningfully. I would downgrade to bearish if revenue growth turns negative or if net margin falls below 2%, signaling that the value trap scenario is materializing.
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 $451.48 and implied upside of +11.7% versus the current price.
Average Target
$451.48
0 analysts
Implied Upside
+11.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$393 - $492
Analyst target range
Coverage is robust with 21 analysts, and the consensus recommendation is "buy" with a recommendation mean of 1.82 (where 1.0 is a strong buy). The average target price of $451.38 implies approximately +16.8% upside from the current price of $386.43, and notably even the lowest target of $393.00 sits above the current price — a rare configuration that signals analysts collectively view the recent pullback as an overshoot. The consensus is clearly bullish, with recent actions from Bernstein (Outperform), Guggenheim (Buy), TD Cowen (Buy), Truist (Buy), Wells Fargo (Overweight), and Barclays (Overweight) all reiterating constructive ratings in mid-July 2026.
The target range spans $393.00 to $492.00, a spread of about 25% of the low end, which indicates moderate-to-high uncertainty rather than tight conviction. The high target of $492.00 implies roughly +27% upside and would require multiple expansion back toward 15–16x forward earnings plus successful execution on Carelon margin expansion and favorable 2027 Medicare Advantage rate realization. The low target of $393.00 — still above the current price — prices in continued medical cost pressure and flat growth but no deterioration, effectively framing the current price as a floor. Institutional ratings show no downgrades in the recent window, and with estimated EPS averaging $46.69 against a forward PE near 13x, the analyst community appears to be betting that the de-rating has run its course.
Bulls vs Bears: ELV Investment Factors
The bear case currently has stronger near-term evidence: revenue growth of just 1.4% year over year, year-over-year margin compression, and a broken short-term momentum trend (down 7.53% over 3 months) all argue that the de-rating from 35.2x to 13.9x trailing earnings reflects genuine fundamental deterioration rather than mere sentiment. However, the bull case rests on a powerful valuation floor — even the lowest analyst target of $393.00 sits above the current price, and the 13.08x forward PE with a 1.97% dividend yield embeds limited optimism. The single most important tension is whether medical cost trend stabilizes in the coming quarters; if it does, the deep-value multiple and Carelon's margin contribution could drive a re-rating, but if cost inflation persists, the stock risks becoming a value trap despite its cheap optics.
Bullish
- Deep value multiple near multi-year lows: ELV trades at 13.92x trailing earnings and 13.08x forward earnings, a steep compression from 35.2x in Q4 2022 and 29.8x in Q3 2024. Price-to-book of 1.77x is also near multi-year lows versus the 2.0–3.0x range in 2022–2023, suggesting the market has already priced in significant pessimism.
- Analyst targets imply double-digit upside: With 21 analysts covering the stock, the consensus average target price of $451.38 implies +16.8% upside from the current $386.43. Notably, even the lowest target of $393.00 sits above the current price, a rare configuration indicating analysts view the recent pullback as an overshoot.
- Carelon services engine growing: Carelon Services contributed $19.225 billion in Q2 2026 revenue (before eliminations), while the core Health Benefits segment generated $42.72 billion. The services platform is the margin-accretive growth driver, cross-selling into Elevance's 45 million members and third-party payers.
- Profitability recovering from Q4 trough: Q2 2026 net income of $1.463 billion and a 2.90% net margin represent a sharp recovery from Q4 2025's $547 million and 1.10% net margin. Operating margin improved to 4.07% from 1.17% in Q4 2025, and EBITDA rebounded to $2.103 billion from $987 million.
Bearish
- Revenue growth has stalled: Q2 2026 revenue of $50.474 billion grew just 1.4% year over year, following a similarly flat progression from $50.711 billion in Q3 2025 and $50.181 billion in Q1 2026. This low-single-digit trajectory implies the investment case now rests entirely on margin and capital return rather than growth.
- Year-over-year margin compression: Q2 2026 net income of $1.463 billion and EBITDA of $2.103 billion compare unfavorably to Q2 2025's $1.743 billion and $3.013 billion, respectively. This compression suggests medical cost trend and mix are pressuring underwriting margins even as absolute profit normalizes.
- Recent momentum has broken down: The stock is down 4.78% over 1 month and 7.53% over 3 months, trailing SPY by 5.37 and 10.87 percentage points, respectively. The failure to reclaim the July 2026 high of $436.24 despite a strong six-month trend signals a digestion phase rather than a fresh breakout.
- Thin margins limit error tolerance: Gross margin of 25.56% and net margin of 2.84% reflect the low-margin nature of insurance underwriting. Operating margin of 4.07% leaves little cushion if medical cost inflation accelerates or government rate updates disappoint.
ELV Technical Analysis
Elevance is in a choppy but net-positive uptrend over the trailing year, with a 1-year price change of +13.58% and a 6-month gain of +28.49%, though the stock has cooled materially from its July peak. At the current price of $386.43, the shares sit roughly 68.9% of the way through the 52-week range of $274.84 to $436.24 — closer to the upper end but well off the high, implying the stock retains a constructive base but has surrendered momentum leadership. The 52-week high of $436.24 was set during the July 2026 run, and the failure to reclaim it despite a strong six-month trend suggests the market is now in a digestion phase rather than a fresh breakout.
Short-term momentum has clearly decelerated and diverges from the longer-term trend: the 1-month change is -4.78% and the 3-month change is -7.53%, even as the 6-month change remains +28.49%. This divergence — a strong half-year offset by a weak quarter — signals a temporary pullback or mean-reversion phase rather than a confirmed trend reversal, particularly since the stock bounced +1.25% on the most recent session (from $381.67 to $386.43) on volume of 892,178 shares. Relative strength confirms the soft patch: ELV trails SPY by 5.37 percentage points over 1 month and 10.87 points over 3 months, though it still leads SPY by 11.14 points over 6 months, underscoring that the underperformance is recent and rotational rather than structural.
Key technical levels are well defined: support rests at the 52-week low of $274.84, with a secondary psychological floor near the $380 area that has held on the latest close, while resistance sits at the 52-week high of $436.24. A breakout above $436.24 would confirm resumption of the primary uptrend and likely open a new leg higher, whereas a breakdown below $380 would put the $350–$360 zone in play and test the credibility of the six-month advance. Volatility is modest — beta of 0.696 means the stock is roughly 30% less volatile than the S&P 500, which supports smaller position-sizing adjustments and makes the -26.49% max drawdown a meaningful but not extreme risk marker for a defensive healthcare name.
Beta
0.71
0.71x market volatility
Max Drawdown
-26.5%
Largest decline past year
52-Week Range
$275-$436
Price range past year
Annual Return
+13.1%
Cumulative gain past year
| Period | ELV Return | S&P 500 |
|---|---|---|
| 1m | -0.8% | +0.9% |
| 3m | -3.8% | +3.4% |
| 6m | +29.8% | +14.4% |
| 1y | +13.1% | +16.2% |
| ytd | +14.1% | +14.0% |
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ELV Fundamental Analysis
Revenue growth has slowed to a crawl: Q2 2026 revenue of $50.474 billion grew just 1.4% year over year versus $49.776 billion in Q2 2025, following a similarly flat progression from $50.711 billion in Q3 2025 and $50.181 billion in Q1 2026. The segment mix tells the real story — Health Benefits contributed $42.72 billion while Carelon Services added $19.225 billion (before $12.125 billion of eliminations), meaning the services engine is doing the heavy lifting while the core insurance book stagnates. This low-single-digit top-line trajectory implies the investment case now rests on margin and capital return rather than growth, and any acceleration would likely need to come from Carelon cross-selling or government-program rate updates.
Profitability is thin but positive and improving off a weak base: Q2 2026 net income was $1.463 billion on a 2.90% net margin, up from $547 million and a 1.10% net margin in Q4 2025, while gross margin of 25.56% (per valuation data) reflects the low-margin nature of insurance underwriting. Operating margin of 4.07% and EBITDA of $2.103 billion in Q2 2026 show sequential recovery from the Q4 2025 trough (EBITDA of $987 million, operating margin 1.17%), but the year-ago Q2 2025 comparison was stronger on net income ($1.743 billion) and EBITDA ($3.013 billion). The compression versus the prior-year quarter is the key watch item — it suggests medical cost trend and mix are pressuring underwriting margins even as the absolute profit level normalizes.
Balance sheet and cash generation are adequate but not fortress-like: debt-to-equity of 0.757 and a current ratio of 1.239 indicate moderate leverage with reasonable near-term liquidity, while ROE of 12.90% and ROA of 3.83% are respectable for a capital-intensive insurer. Free cash flow is lumpy — $6.289 billion on a trailing-twelve-month basis, but quarterly FCF swung from $4.097 billion in Q1 2026 to $1.626 billion in Q2 2026 and -$209 million in Q4 2025 — reflecting working-capital volatility typical of insurance. With $10.232 billion of cash at the end of Q2 2026, $373 million of quarterly dividends paid, and $234 million of buybacks, the company funds shareholder returns internally, though the 27.0% payout ratio and 1.97% dividend yield leave room for continued capital return without external financing.
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?
Because Elevance is solidly profitable — Q2 2026 net income of $1.463 billion and trailing EPS positive — the PE ratio is the appropriate primary metric, and the stock trades at 13.92x trailing earnings versus 13.08x forward earnings. The narrow gap between trailing and forward multiples implies the market expects only modest earnings growth, consistent with the 1.4% revenue growth and the analyst consensus EPS estimate of $46.69 for the coming year. A forward PE of roughly 13x is undemanding in absolute terms and reflects a market that is pricing managed care as a low-growth, regulated-return business rather than a compounder.
On peer and sector comparison, Elevance screens cheap across most metrics: a price-to-sales ratio of just 0.39 and EV/Sales of 0.38 are exceptionally low, and EV/EBITDA of 10.51 is reasonable for a large-cap insurer, while the 1.77 price-to-book sits below the 2.0–3.0x range the stock commanded in 2022–2023. The 25.56% gross margin and 2.84% net margin are structurally thin, which explains much of the low multiple — insurers are valued on earnings stability and capital return, not gross profitability. The premium/discount question is therefore less about multiple expansion and more about whether the market is over-discounting medical cost trend risk; at 13.9x trailing earnings with a 1.97% dividend yield and 27.0% payout ratio, the valuation embeds limited optimism.
Historical context reinforces the de-rating story: Elevance's PE ratio has compressed from 35.2x in Q4 2022 and 29.8x in Q3 2024 to 13.9x today, while price-to-book has fallen from 3.37x in Q4 2022 to 1.77x currently — both near multi-year lows. The PEG ratio of -5.70 is not meaningful given negative growth comparisons, but the direction of travel is clear: the stock has moved from a premium multiple to a deep-value multiple. This positioning suggests either a genuine value opportunity if margins stabilize, or a value trap if medical cost inflation and government rate pressure persist — the resolution likely hinges on the next few quarters of margin performance.
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 and operational risks center on Elevance's thin margins and lumpy cash generation. With a net margin of just 2.84% and operating margin of 4.07%, the company has minimal buffer against unexpected medical cost inflation or adverse government rate updates. Free cash flow is volatile — swinging from $4.097 billion in Q1 2026 to $1.626 billion in Q2 2026 and -$209 million in Q4 2025 — which complicates capital return planning despite $10.232 billion of cash on hand. Debt-to-equity of 0.757 and a current ratio of 1.239 indicate moderate leverage, but the 27.0% payout ratio and $373 million of quarterly dividends plus $234 million of buybacks mean shareholder returns are funded internally with limited flexibility if earnings deteriorate.
Market and competitive risks are dominated by valuation compression and sector-specific headwinds. While the 13.92x trailing PE is undemanding in absolute terms, it reflects a market that prices managed care as a low-growth, regulated-return business; any further multiple contraction would be painful given the stock already trades near multi-year low multiples. Beta of 0.696 means ELV is roughly 30% less volatile than the S&P 500, but this defensiveness has not prevented a 10.87 percentage point underperformance versus SPY over 3 months. The April 2026 CMS announcement of a larger-than-expected 2027 Medicare Advantage payment increase provided a sector-wide sentiment boost, but Elevance's subsequent 1.4% revenue growth shows the company is not fully capturing that tailwind, raising questions about competitive positioning versus peers like UnitedHealth and Humana.
A worst-case scenario would involve a combination of accelerating medical cost trend, disappointing 2027 Medicare Advantage rate realization, and continued Medicaid redetermination headwinds compressing margins below Q4 2025 levels. In that scenario, the stock could retest its 52-week low of $274.84, representing a decline of approximately -28.9% from the current price of $386.43. The historical max drawdown of -26.49% provides a comparable reference for downside magnitude. If analyst estimates were revised sharply lower — say, forward EPS cut from $46.69 to $40 — the forward PE would rise to roughly 9.7x on the current price, but the market would likely re-rate the stock lower to maintain a 13x multiple, implying a price near $520 at the old multiple or a further decline if the multiple compresses. The realistic downside from current levels is -25% to -30%, testing the $275–$290 zone.
FAQ
The most severe risk is margin compression from accelerating medical cost trend: Q2 2026 net margin of 2.90% is already below Q2 2025's 3.50%, and further deterioration could push operating margin below 3%. Second, government rate risk: the April 2026 CMS announcement of a larger-than-expected 2027 Medicare Advantage payment increase boosted sentiment, but if final rates disappoint, revenue visibility would suffer. Third, competitive risk: Elevance's 1.4% revenue growth lags the sector, and peers like UnitedHealth and Humana may be better positioned to capture Medicare Advantage growth. Fourth, financial risk: free cash flow is lumpy, swinging from $4.097 billion in Q1 2026 to $1.626 billion in Q2 2026, and debt-to-equity of 0.757 with a current ratio of 1.239 leaves moderate leverage. Ranked by severity: margin compression, government rate risk, competitive positioning, and cash flow volatility.
The 12-month forecast has three scenarios: bull case (25% probability) targeting $451–$492, base case (55% probability) targeting $393–$451, and bear case (20% probability) targeting $275–$393. The base case is most likely, assuming medical cost trend remains elevated but does not accelerate, 2027 Medicare Advantage rates are in line with the April 2026 preliminary increase, and Carelon continues to grow without materially altering consolidated margins. The key assumption behind the base case is that net margin stabilizes around 2.8–3.0%, consistent with Q2 2026 performance. The bull case requires margin expansion back toward Q2 2025 levels and a re-rating toward 15–16x forward earnings, while the bear case involves accelerating medical cost inflation and disappointing government rate updates.
ELV appears undervalued on both absolute and relative bases. The trailing PE of 13.92x and forward PE of 13.08x are near multi-year lows, down from 35.2x in Q4 2022 and 29.8x in Q3 2024. Price-to-book of 1.77x is below the 2.0–3.0x range the stock commanded in 2022–2023, and price-to-sales of 0.39 and EV/Sales of 0.38 are exceptionally low. The market is pricing ELV as a low-growth, regulated-return business, embedding limited optimism. However, the 25.56% gross margin and 2.84% net margin are structurally thin, which explains much of the low multiple. The valuation implies the market expects continued medical cost pressure and flat growth, but no deterioration — if margins stabilize, the multiple could expand toward 15–16x, implying significant upside.
From a risk/reward perspective, ELV offers a favorable skew: the analyst average target of $451.38 implies +16.8% upside, and even the lowest target of $393.00 sits above the current price of $386.43, suggesting a valuation floor. The forward PE of 13.08x is near multi-year lows, and the 1.97% dividend yield provides income while waiting for a re-rating. However, the biggest downside risk is a retest of the 52-week low of $274.84, which would represent a -28.9% decline, and the 1.4% revenue growth means there is no growth catalyst to force a near-term re-rating. ELV is a good buy for value-oriented investors with a 12–24 month horizon who can tolerate near-term volatility, but it is not suitable for growth investors or those seeking quick returns.
ELV is better suited for long-term investment than short-term trading. The stock's beta of 0.696 means it is roughly 30% less volatile than the S&P 500, which limits short-term trading opportunities, and the 1.97% dividend yield with a 27.0% payout ratio rewards patient holding. The deep-value valuation at 13.08x forward earnings and analyst target upside of +16.8% suggest a multi-quarter re-rating story rather than a quick trade. However, the recent 7.53% three-month decline and 10.87 percentage point underperformance versus SPY show that near-term momentum is negative, making short-term trading risky. A suggested minimum holding period is 12–18 months to allow for margin stabilization and potential multiple expansion, with a stop-loss consideration near the $350–$360 support zone.