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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
ELV — frequently asked questions
Is Elevance Health Inc. overvalued?
In our latest published analysis dated 2026-10-22, ELV looks modestly undervalued. The price recorded at analysis is 434 USD versus our fair value of 475 USD; the high endpoint is presented separately as potential value of 627 USD. That implies roughly 9.3% upside to fair value at that date.
Our latest published report, analyzed 2026-10-22, gives ELV a fair value of 475 USD and a potential value of 627 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Elevance Health Inc.'s archetype; it is a dated research output, not a live price.
Should I buy ELV now?
Our latest published rating for ELV, analyzed 2026-10-22, is Hold. Elevance Health Inc. looks modestly undervalued at the analysis-date price of 434 USD versus fair value of 475 USD; potential value is 627 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for ELV?
The dedicated bear-case section in our report analyzed 2026-10-22 documents Elevance Health Inc.'s material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is ELV's rating?
Our latest published rating for ELV, analyzed 2026-10-22, is Hold, with a published moat assessment of 7.5/10 (Narrow). It reflects our fair value of 475 USD, the potential value of 627 USD, and the price recorded at analysis (434 USD).
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§1 ZusammenfassungEN
30-Sekunden-AntwortHold
Preis im Verhältnis zum Wert
Kurs
$434.13
Fairer Wert
$474.64
Potenzialwert
$627.40
Stand
2026-10-21
Warum es funktionieren kann
Accelerated margin expansion across Medicaid and Medicare Advantage, coupled with high-margin external Carelon service wins, enabling Elevance to exceed its 12% EPS growth target and push operating margins toward 4.5%.
Was unsere Einschätzung ändern würde
Medical cost trend inflation outstripping state Medicaid rate updates and commercial price resets.
Elevance Health is rated Hold with Fair value of $474.64, representing 9.3% implied upside from $434.13 (as of 2026-10-21). Disciplined commercial pricing resets and accelerating Carelon fee-based growth support solid multi-year earnings power, but valuation offers a balanced risk/reward that warrants holding existing positions rather than committing fresh capital.
Elevance delivered solid third quarter 2026 operating results that demonstrated resilient execution across its diversified portfolio. Operating revenue reached $50.4 billion (up 0.7% YoY), while adjusted diluted earnings per share expanded 15.9% YoY to $6.99. Management raised its full-year 2026 adjusted diluted EPSguidance to at least $29.00 and increased full-year guidance to at least $6.5 billion. Operating cash flow generation rebounded strongly to $7.5 billion through the first nine months of 2026, reversing headwinds from 2025.
Underwriting margin recovery is underway but progresses unevenly across lines of business. In Medicaid, state rate updates implemented on July 1st delivered sequential margin improvements, although underlying medical cost trends remain elevated. In Commercial Group, disciplined low-double-digit pricing actions are holding performance in line with management's plan. Simultaneously, Carelon expanded operating gain by 17% YoY in Q3, with CarelonRx maintaining a healthy 5.3% operating margin, proving the structural benefits of integrated medical and pharmacy execution.5
With the stock trading at $434.13, shares offer an 8.53% discount to our Fair Value midpoint of $474.64 (9.33% implied upside). While management's outlook for at least 12% adjusted EPS growth in fiscal 2027 provides constructive fundamental visibility, the current return hurdle does not meet our required threshold to initiate new capital. We maintain our Hold rating and advise investors to preserve existing holdings while tracking quarterly underwriting margin recovery.5
Accelerating Fee-Based Carelon Growth
CarelonRx and Carelon Services delivered $19.3B in revenue and 17% operating gain growth in Q3 2026, generating high-margin fee income with low capital requirements.5
Dominant Blue Cross Blue Shield Regional Market Share
Anthem Blue Cross Blue Shield market dominance across 14 states drove jumbo employer account wins and supported 1.3M ACA enrollment, demonstrating superior brand retention.
Robust Cash Flow Recovery and Shareholder Return Capacity
Management raised FY2026 operating cash flowguidance to at least $6.5B, backing a secure $6.88 annualized dividend and $5.0B in remaining share repurchase authority.
Hausempfehlung
Hold. Elevance is fundamentally sound with clear margin recovery initiatives and strong Carelon execution, but the 9.33% upside to our $474.64 Fair Value does not warrant fresh capital deployment under house discipline.
Unternehmensüberblick
Elevance Health, Inc. (NYSE: ELV) is a leading American health benefits company and lifetime health partner supporting approximately 103 million consumers across its diverse medical, clinical, pharmacy, and complex care platforms. The company operates through four reportable segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. Health Benefits delivers commercial, individual, Medicare, Medicaid, and Federal Employee Program health coverage, holding exclusive Blue Cross Blue Shield licenses across 14 states.
Carelon encompasses Elevance's non-regulated healthcare services, providing pharmacy benefit management, dispensing assets, behavioral healthcare, oncology solutions, and home-based care coordination to captive health plans and external third-party payers. For the full year 2025, Elevance generated $199.1 billion in operating revenue, $7.2 billion in operating income, and $5.7 billion in net income, serving 44.9 million medical members.
§2 BärenszenarioEN
Our stress test evaluates an adverse 12-to-24 month underwriting stagflation scenario where medical loss ratios remain elevated above 91.0%, Medicaid redetermination rate catch-ups lag into fiscal 2027, and commercial group medical cost inflation stays in the low double digits. In this scenario, consolidated operating margin remains suppressed below 2.5%, preventing normalization toward the 4.2% house target. The compounding effect of historical CMS risk adjustment data liabilities ($935M pre-tax charge in 9M 2026) and membership attrition to national peers UNH and CI would compress operating earnings growth to 3%-5%, testing debt service coverage and constraining share repurchase capacity.
Consolidated operating margins remain depressed well below historical norms
Commercial and Medicare enrollment contracts further
Adjusted EPS growth slows to low single digits annually
Valuation multiple de-rates toward peer managed care historical discount levels
Medical cost trends in Commercial and Medicaid remain persistently elevated, while state Medicaid rate updates lag acuity increases into 2027. Competitive pressure from UNH and CI accelerates commercial membership attrition, while regulatory audits and Star Rating cuts constrain Medicare Advantage profitability, trapping operating margins below 3.0% and causing valuation multiple contraction toward peer levels.
Wie diese These scheitern kann
Severe Underwriting Margin Compression from Uncontrolled Medical Utilization
In Q3 2026, operating margin fell to 2.5% while Health Benefits segment operating margin compressed to 1.0%. If low double-digit commercial utilization continues and state Medicaid rate updates fail to catch up, margins will remain stuck below 2.5% rather than normalizing to 4.2%.5
Operating margin fails to rebound toward the 4.0% normalization path due to persistent medical utilization and state Medicaid rate update delays.
Aktuell:2.5% (Q3 2026)
Alarm, wenn< 2.5%
02
§3 WettbewerbsgrabenEN
Narrow
Elevance Health possesses a Narrow economic moat grounded in structural cost advantages from local market scale, exclusive Blue Cross Blue Shield (BCBS) brand licensing in 14 states, and expanding fee-based healthcare services via Carelon. In managed care, scale is fundamentally local: health plans with dominant regional market share negotiate superior unit-cost discounts with hospitals and physician networks, directly lowering the underlying cost of care and creating a durable pricing advantage over smaller competitors.
In addition to scale-based provider cost advantages, Elevance benefits from meaningful switching costs in its Commercial Fee-Based (27.6M members) and Employer Group books. Replacing an established managed care administrator disrupts employee doctor relationships, requires extensive IT and benefits re-enrollment, and exposes corporate sponsors to network friction. The return of several jumbo accounts to Anthem after a single year with a competitor highlights the operational moat protecting Elevance's employer franchise.
The rapid development of Carelon (CarelonRx and Carelon Services) strengthens the moat by integrating clinical, behavioral, and pharmacy services into risk-bearing and administrative plans. Carelon delivered $19.3B in operating revenue and $0.9B in operating gain in Q3 2026 (up 17% YoY), achieving a 5.3% margin in CarelonRx. This vertical integration retains profit internally, reduces medical cost trend, and captures external selling opportunities with third-party payers.
The moat remains Narrow rather than Wide due to substantial regulatory dependence and customer concentration in government programs. With 8.2M Medicaid members and 2.8M Medicare members, Elevance is vulnerable to state rate lag, CMS Star Rating adjustments, and regulatory audits ($935M historical risk adjustment accrual in 2026). Furthermore, national competitors UNH and CI aggressively contest jumbo employer accounts, capping excess returns.
Ökonomischer Gewinn
Elevance generated 2025 operating income of $7,199M and net income of $5,662M. Its economic return on invested capital comfortably exceeds its weighted average cost of capital of 7.5543% and moderate cost of equity of 8.4449%. Structural cost advantages from Blue Cross Blue Shield contracting and high-margin Carelon services ensure that normalized operating margins of 3.7% to 4.2% will generate positive economic profit throughout the underwriting cycle.2,6
7.5/ 10
Narrow
Sources of advantage
01Local Blue Cross Blue Shield Network Scale and Cost Advantage — Exclusive Blue Cross Blue Shield licensing rights across 14 key states provide Elevance with dominant regional market share and unparalleled provider contracting scale. These agreements enable deeply discounted reimbursement rates, establishing network density barriers that national competitors cannot easily match.Wide
02High Switching Costs in Commercial and Jumbo Employer Accounts — High administrative friction, customized provider networks, and integrated care solutions create substantial switching costs for employer groups. In Q3 2026, leadership confirmed that several large jumbo employers returned to Anthem after moving away for 12 months, proving strong retention inertia.Moderate
03Carelon Healthcare Services and Pharmacy Integration — CarelonRx and Carelon Services embed pharmacy dispensing, behavioral health, and complex care management directly into benefit plans, capturing incremental of 5.3% while serving 91.0 million consumers across captive and external clients.
Bekannte Bedrohungen für den Wettbewerbsvorteil
Bedrohung
Schweregrad
Zeitrahmen
Minderung
Aggressive pricing competition in commercial group and jumbo employer accounts from national peers UNH and CI.
medium
12-24 months
Bundling Carelon clinical and pharmacy capabilities with Anthem Blue Cross Blue Shield networks to demonstrate superior total cost of care and member outcomes.5
The highlighted cell is Fair value when every assumption sits at its base level ($474.64). Each row and column shows what Fair value becomes when one assumption moves.
Operating margin normalizes gradually toward long-term targets from FY2026 through FY2030
§7 Entscheidungsbaum für ErgebnisseEN
Übertroffen
Upgrade the rating; Examine whether outperformance is driven by sustainable medical loss ratio normalization and Carelon third-party contract wins; evaluate position sizing if the valuation discount expands beyond the required hurdle.
Auslöser: Full-year adjusted EPS exceeding management guidance with medical benefit expense ratio improving significantly and FY2027 guidance indicating accelerating earnings growth.
A material beat confirms that commercial low-double-digit pricing and state Medicaid rate updates are restoring health plan underwriting profitability ahead of the multi-year normalization trajectory.
Im Plan
Maintain Hold; Maintain current position weight; monitor the pace of state Medicaid rate adjustments and verify jumbo commercial account retention through the annual selling season.
Auslöser: Full-year adjusted EPS meeting management guidance targets, FY2027 earnings growth meeting initial outlook, and benefit expense ratio tracking in line with pricing assumptions.
Inline results validate our baseline assumption of gradual operating margin normalization to 4.2% by 2030, keeping implied upside at 9.33% and supporting the Hold stance.
Verfehlt
Downgrade the rating; Trim exposure, review medical claims reserve development, and stress test whether elevated commercial utilization has permanently impaired underwriting margins.
Auslöser: Full-year adjusted EPS falling short of guidance, medical benefit expense ratio deteriorating above pricing assumptions, or FY2027 earnings growth outlook decelerating.
A miss indicates that medical utilization inflation has overrun pricing resets and Carelon fee growth cannot offset health plan underwriting compression.
Ergebnisqualität
Third quarter 2026 GAAP diluted EPS of $6.27 and adjusted diluted EPS of $6.99 reflected strong underlying operating execution alongside a net non-operating benefit of $1.85 per share. Non-GAAP adjustments included $0.19 per share in transaction/integration costs, $0.08 in business optimization charges, and $0.04 in litigation expenses, while the nine-month period absorbed a $4.28 per share ($935M pre-tax) accrual for historical CMS risk adjustment data. Operating cash flow of $1.3B in Q3 and $7.5B through 9M 2026 confirms strong cash conversion and high earnings quality.5
Dynamik der Schätzungen
Estimate momentum is positive following the Q3 2026 earnings release, where management raised full-year adjusted EPSguidance to at least $29.00. Analyst consensus FY2026 EPS rose to $27.24-$27.53, and FY2027 consensus EPS reached $29.73, supported by management's target of at least 12% adjusted EPS growth in fiscal 2027.1,5
Operating cash flow compressed to $4,290M in 2025, yielding free cash flow of $3,174M against net income of $5,662M due to medical claims payable dynamics and redetermination working capital adjustments. However, 9M 2026 operating cash flow surged to $7,512M (up from $4,206M in 9M 2025), driven by favorable working capital and a 3.5-day increase in Days in Claims Payable to 44.9 days. Management raised full-year 2026 operating cash flow guidance to at least $6.5 billion, confirming that cash conversion has fully normalized.5
Kapitalallokation
Elevance pursues a disciplined capital allocation strategy focused on organic capability enhancement, targeted M&A, and returning excess capital to shareholders. remain modest at $1,116M in 2025 and $789M through 9M 2026, primarily supporting digital and clinical infrastructure. Through 9M 2026, the company repurchased $1,688M of (including 0.8M shares in Q3 for $330M) and distributed $1,122M in cash dividends ($1.72 per share quarterly). Elevance maintains $5.0B in remaining share repurchase authorization. Total debt stood at $30,757M against $10,348M in as of September 30, 2026, representing comfortable .
Elevance has maintained stable economic returns despite underwriting margin compression from 4.96% in 2023 to 3.62% in 2025. Management guidance of full-year 2026 adjusted EPS of at least $29.00 and FY2027 adjusted EPS of $29.73 confirms return on invested capital will remain resilient.
Elevance's effective return on capital comfortably exceeds its weighted average cost of capital of 7.5543% and moderate cost of equity of 8.4449%, demonstrating sustained value creation through the underwriting cycle.
Pricing Discipline Prioritized Over Enrollment Growth in Commercial Risk
Commercial risk-based membership fell 5.2% YoY in Q3 2026 to 4.714M, but Commercial operating revenue rose 3.8% to $13,343M as pricing caught up to low-double-digit cost trends.
Underwriting profitability takes precedence over membership volume, establishing the foundation for operating margin expansion from 3.7% in 2026 to 4.2% by 2030.
Jüngster Umsatz199,1 Mrd. $Umsatz-CAGR +9,9 %
Betriebsmarge3,6 %10 Geschäftsjahresperioden
Jüngster freier Cashflow3,2 Mrd. $FY2025
Nettoliquidität3,5 Mrd. $FY2025
Aufschlüsselung der Gewinn- und VerlustrechnungWie sich die Unternehmensgröße in ausgewiesenen Gewinn übersetzt.
Elevance Health Inc. (ELV) trades at 13.7x forward earnings against a peer median of 14.4x. Its EV/EBITDA of 10.6x compares with a peer median of 11.3x. The comparison uses 4 peers: The Cigna Group, CVS Health Corporation, Humana Inc. and UnitedHealth Group Incorporated, as of 2026-10-22.
§10 Branche & ZyklusEN
Zyklusphase
Trough
The managed care sector exhibits low capital asset intensity, reflected in industry capex-to-revenue of 0.9% and capex-to-depreciation of 0.81. Elevance generated 2025 operating cash flow of $4,290M with capital expenditures of $1,116M. The capital cycle is currently at a margin trough following post-pandemic Medicaid redeterminations and utilization spikes, with operators now raising commercial premium rates and renegotiating government contracts to restore capital generation.6
Bullenzyklus
A favorable underwriting cycle phase characterized by disciplined industry pricing, state Medicaid rate increases exceeding medical cost trends, moderating outpatient utilization, and expanding margins in Medicare Advantage toward the 3%-5% long-term target.
Bärenzyklus
An adverse managed care down-cycle marked by sticky low-double-digit commercial medical cost trends, state budget constraints depressing Medicaid premium rate updates below claims acuity, heightened independent dispute resolution costs, and CMS audit penalties.
Säkulare Trends
Trend
Auswirkung
Hinweis
Aging Demographics and Chronic Disease Management Demand
positive
Long-term expansion of the Medicare-eligible population drives structural demand for Medicare Advantage and complex care management solutions delivered via Carelon.
Shift Toward Non-Regulated Healthcare Services and Pharmacy Integration
positive
Managed care organizations are increasingly capturing value in pharmacy dispensing, behavioral health, and ambulatory services, shielding overall corporate margins from underwriting loss ratio volatility.
Positionierung
Elevance occupies a strong defensive position within the commercial group and Medicaid landscapes due to its local Blue Cross Blue Shield market share. By scaling Carelon to $19.3 billion in Q3 2026 revenue with 4.7% operating margins, Elevance diversifies away from pure underwriting risk faster than government-heavy peers like Humana (HUM), though it remains more exposed to state Medicaid rate resets than diversified peer Cigna (CI).3
§11 PositionsmanagementEN
Positionsgröße
2-3%
Under our Hold recommendation, implied upside of 9.3% from $434.13 to Fair value of $474.64 offers positive return potential but does not provide sufficient margin of safety to warrant initiating a fresh position or adding capital. Existing holders should maintain moderate exposure while monitoring quarterly margin execution.
Risiko
Manage managed care portfolio risk by limiting individual issuer exposure to 3.5% of total portfolio capital. Monitor regulatory exposure including CMS risk adjustment data audits ($935M accrual) and maintain strict adherence to checkpoint thresholds.
Einstiegstranchen
Niveau
Aktion
Warum
Initial discount tier below $434.13
Initial Accumulation Tranche
Represents a ~15-18% discount to Fair Value of $474.64, near the Q3 repurchase price of $398.75, providing an adequate margin of safety.
Secondary accumulation tier below $434.13
Full Target Weight Allocation
Aligns with conservative underwriting valuation scenarios to provide an enhanced margin of safety before reaching full position allocation.
Trading at 13.68x forward earnings with an 8.53% discount to Fair Value of $474.64, Elevance offers modest upside, but current prices lack the 15%+ margin of safety required for fresh buying.4
GARP Investor
Hold
Management's guidance of at least 12% adjusted EPS growth in FY2027 is attractive, but execution on Medicaid rate recoveries and commercial cost inflation must be confirmed before adding to positions.5
Income & Capital Preservation Investor
Hold
A secure dividend yielding ~1.6% ($6.88 annualized, $1.72 quarterly) backed by $6.5B+ in operating cash flowguidance supports existing holdings, but total return upside is constrained near term.5
§14 Endgültige EmpfehlungEN
Aktion
Halten
Elevance Health is rated Hold with Fair value of $474.64, offering 9.3% implied upside from $434.13 (as of 2026-10-21).
While third-quarter results demonstrated robust operational execution—prompting management to raise full-year earnings guidance and target double-digit earnings growth for FY2027 —the implied upside of 9.3% does not provide sufficient margin of safety to initiate fresh positions. Investors should maintain existing holdings and await further evidence of Medicaid margin normalization.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Elevance currently trades at 13.68x forward P/E, while peer CI trades at 9.09x and CVS trades at 10.95x. A 20% de-rating towards peers would compress the multiple to 10.8x under prolonged medical loss ratio pressure.3,4
FV impact
-6.1%
Terminal multiple 20% lower
Trigger
Within 12 months
Accelerated Medical Membership Contraction and Account Losses
Total medical membership dropped by 487,000 YoY to 44.882M with MA down 15.5% and Medicaid down 4.9%, while FY2026 revenue is projected to contract -0.78%. A 500 bps drag on 5-year revenue growth reflects continuing enrollment attrition to peers UNH and CI.1,5
FV impact
-1.6%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 24 months
Elevated Cost of Capital on Regulatory Scrutiny and Rate Disruption
Computed moderate Ke is 8.4449%, with normalized cycle Ke at 8.8124%. A 100 bps discount rate expansion to 9.44% captures regulatory risk adjustment audits ($935M accrual) and heightened healthcare policy uncertainty.2,5
FV impact
-9.8%
Cost of capital 1 point higher
Trigger
Within 12 months
Commercial Risk Membership Contraction
Severe jumbo employer defections to competitors such as UNH or CI impairing commercial underwriting pricing power.
State Medicaid reimbursement rate updates lagging elevated medical utilization trends following eligibility redeterminations.
high
6-18 months
Proactive rate negotiations with state actuarial partners using post-redetermination acuity data, with July 1st rate updates already delivering initial sequential margin uplift.5
Heightened federal scrutiny on PBM spread pricing and CMS Medicare Advantage risk adjustment audits.
medium
Ongoing
Transparent pass-through pharmacy pricing models in CarelonRx and conservative reserves ($935M CMS notice accrual).5
Nine-month operating cash flow reached $7,512M in 2026 compared to $4,206M in the prior-year period, prompting management to raise FY2026 guidance to at least $6.5B.
Rebounding cash flow supports steady debt reduction and share repurchases under the $5.0B remaining board authorization.
