Elevance Health, Inc.

Based on a comprehensive review, ELV presents a cautious hold rather than a buy at this time.

Technical Analysis Summary: ELV demonstrates defensive characteristics with its low beta and has shown relative strength against the market. However, sharp recent declines in profitability, a weak liquidity position as indicated by the low interest coverage ratio, and concerning valuation metrics like a negative PEG ratio and high forward P/E create significant headwinds. The stock appears reasonably priced on a trailing basis, but the market is anticipating substantially lower future earnings.

Recommendation: For investors with a high risk tolerance and a long-term horizon, ELV's current price may offer a potential entry point into a historically defensive name, but this is speculative. Prudent investors should wait for clearer signs of a turnaround in profitability and an improvement in its financial health metrics before committing capital. The current risk/reward profile is not compelling enough for a broad buy recommendation, given the fundamental pressures.

*This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for ELV stock (Elevance Health):

12-Month Outlook for ELV

The primary catalyst for ELV will be demonstrating a successful turnaround in profitability and stabilizing its earnings outlook, which could lead to a re-rating if the market gains confidence in its future growth trajectory. Key risks include the continuation of sharp earnings declines, pressure from its weak liquidity and interest coverage, and the stock potentially de-rating further if its high forward P/E multiple contracts due to disappointing results. Given the absence of a specific analyst target and the current fundamental pressures, a cautious outlook is warranted with a expectation that the stock may trade in a wide range, likely between $300 and $380, as it searches for a new equilibrium based on clearer signs of financial health.

Wall Street Consensus

Most Wall Street analysts are optimistic about Elevance Health, Inc.'s 12-month outlook, with consensus target around $348.18, indicating expected upside potential.

Overall, ELV has investment potential but also faces challenges. Here are key factors to weigh before investing.

ELV has demonstrated mixed performance, showing recent weakness but maintaining relative strength against the broader market over the intermediate term.

The stock has declined 7.69% over the past month despite posting a 5.62% gain over three months, indicating recent pressure. However, its 5.31% relative outperformance versus the market over this period suggests stronger underlying fundamentals. The low beta of 0.503 reflects the stock's defensive characteristics with lower volatility than the broader market.

Currently trading at $346.05, ELV sits approximately 24% above its 52-week low but remains 25% below its yearly high, positioning it in the lower-middle portion of its annual range. While not deeply oversold, the substantial 39% maximum drawdown over the past year indicates the stock has experienced significant volatility from its peak.

Revenue & Profitability ELV's revenue dipped slightly to $49.7 billion in Q4 2025 from $50.7 billion in Q3, while profitability declined significantly with the net income ratio falling from 2.3% to 1.1%. Most concerning is the sharp drop in operating margin from 3.5% to 1.2%, indicating substantial pressure on core profitability despite a relatively stable gross margin around 23-25%.

Financial Health The company maintains a manageable debt structure, evidenced by a conservative debt-to-equity ratio of 0.73 and total debt to capitalization of 42.2%. However, concerning liquidity indicators include a cash ratio of just 0.23 and an alarmingly low interest coverage ratio of 1.59, suggesting potential vulnerability in meeting interest obligations from operating earnings.

Operational Efficiency Operational efficiency metrics show significant challenges, with a weak return on equity of just 1.25% and low asset turnover of 0.41. The negative cash conversion cycle of -1.4 days indicates efficient working capital management, but this is overshadowed by substantial negative free cash flow per share and poor operating cash flow to sales ratio of just 0.17%.

Based on the conflicting PE ratios, ELV presents a complex valuation picture. The trailing PE of 13.44 appears attractive, but the significantly higher forward PE of 35.54 suggests market expectations for materially lower future earnings. The negative PEG ratio, driven by the high forward PE, indicates a potential overvaluation relative to its earnings growth trajectory. The extremely high EV/EBITDA of 101.63 further signals that the company's enterprise value is substantial relative to its current operational cash flow, pointing toward a potentially stretched valuation.

Peer comparison is not possible without industry benchmark data. This absence of context makes it challenging to determine whether ELV's valuation metrics represent a company-specific premium or discount relative to its sector. A thorough assessment would require comparing these metrics against industry averages for managed healthcare providers to establish meaningful valuation conclusions.

Volatility risk appears moderate based on ELV's beta of 0.503, indicating the stock tends to move about half as much as the broader market. However, the significant 1-year maximum drawdown of -39.33% suggests this low-beta profile doesn't fully protect against substantial downward moves during market stress, representing notable capital preservation risk.

Other risks appear limited given the absence of short interest, which removes pressure from coordinated bearish bets. However, as a large-cap stock, broader market sentiment shifts and potential regulatory uncertainties affecting the healthcare sector remain primary concerns alongside general macroeconomic factors.