Introducing Valuation Models! 
Key Takeaways:
- Elevance Health stock could conservatively reach $544 per share by the end of 2027.
- That represents a potential 57% upside from today’s price of approximately $347 per share.
- The health insurer is executing a differentiated whole-person care strategy through its Carelon platform.
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Elevance Health (ELV) stands as one of the nation’s leading health benefits companies, serving 45.8 million medical members across diverse markets, including Medicare Advantage, Medicaid, and commercial health plans.
The company has evolved beyond traditional health insurance into a comprehensive healthcare platform that addresses physical, behavioral, and social health needs through integrated care delivery.
Despite facing industry headwinds from elevated medical cost trends and regulatory changes, Elevance Health is demonstrating operational resilience while executing a strategic transformation toward value-based care and whole-person health solutions.
Its Carelon services platform is emerging as a key growth driver, expanding relationships with external payers and validating its scalable care model.
We conducted a comprehensive valuation analysis on Elevance Health stock to assess its investment potential through 2027.
Using reasonable assumptions based on the company’s diversified business model and strategic positioning in value-based care, our model suggests ELV stock could reach $544 per share by late 2027, representing 57% upside potential.
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What Elevance Health Does
Elevance Health operates as a diversified health benefits company providing medical coverage and related services through multiple business segments.
The Health Benefits segment serves members through Medicare Advantage plans for seniors, Medicaid managed care for low-income populations, and commercial insurance for employers and individuals.
It maintains strong market positions across these segments, with particular strength in Medicaid, where it partners with states to deliver care for complex populations.
Core Platforms
The Carelon platform represents Elevance Health’s strategic evolution into healthcare services delivery.
Carelon encompasses pharmacy services through CarelonRx, clinical services including behavioral health and specialty care, as well as technology solutions that integrate clinical data into provider workflows.
The HealthOS digital platform now supports over 88,000 care providers and more than 1,200 provider organizations, enabling real-time decision-making and streamlined prior authorizations.
Elevance Health’s differentiated approach focuses on “whole-person health,” addressing not just medical needs but also behavioral health, social determinants, and care coordination.
This integrated model drives better outcomes while reducing the total cost of care, as evidenced by nearly $100 per member per month savings achieved through value-based arrangements that combine medical and pharmacy management.
Our Valuation Assumptions for ELV Stock
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
In our valuation, we’ll simply use analysts’ consensus estimates and break down what analysts think the stock is worth today.
Here’s what we used for ELV stock:
1. Revenue Growth: 8.8% CAGR
Elevance Health has demonstrated solid growth with revenue increasing 2.9% over the past year and 11.2% annually over the last five years.
The company’s expansion into new ACA markets, growth in Carelon services, and strategic acquisitions, such as CareBridge, support continued revenue growth as the healthcare services platform scales.
2. Operating Margins: 6.1%
Elevance Health’s EBIT margins currently stand at 6.5% over the last twelve months.
While the healthcare industry faces margin pressure from elevated medical trends, Elevance Health’s focus on value-based care, operational efficiency, and the higher-margin Carelon services should support margin stability and gradual improvement.
3. Exit P/E Multiple: 11x
Elevance Health stock currently trades at a P/E multiple of 9.8x, reflecting the challenging industry environment.
Our exit multiple assumes modest expansion as the company’s strategic transformation demonstrates value and market conditions stabilize, while remaining conservative given the healthcare industry’s cyclicality.
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What the Model Says for ELV Stock
With these inputs, the valuation model estimates that ELV stock could reach approximately $544/share by the end of 2027.
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This translates to an annualized return of approximately 19.9% over the next 2.5 years. The forecast for ELV stock assumes successful execution of the company’s whole-person care strategy, continued growth in Carelon services, and stabilization of medical cost trends as rate adjustments align with member acuity.
The model reflects Elevance Health’s ability to leverage its diversified platform to navigate industry challenges while capitalizing on the growing demand for integrated healthcare solutions and value-based care arrangements.
The model forecasts the business’s future earnings-per-share based on revenue growth and margin expansion and then applies a P/E multiple to estimate the future stock price.
This helps investors understand what financial performance is required to generate strong returns and how much upside is available if those expectations are met.
What Happens If Things Go Better or Worse?
The model enables various scenarios based on execution of strategic initiatives and industry dynamics.
Here’s the range of potential outcomes:
- Low Case: Slower strategic progress with continued margin pressure → 7-9% annual returns.
- Mid Case: Steady execution of transformation strategy → 18-22% annual returns.
- High Case: Accelerated Carelon growth with margin expansion → 25-28% annual returns.
Even the conservative scenario offers attractive returns, reflecting Elevance Health’s diversified revenue streams and the defensive characteristics of the healthcare insurance business.
ELV’s earnings growth is likely to be driven by a combination of factors:
- Carelon Platform Expansion: External growth in healthcare services is validating the scalable platform model, with over 60% growth in services and expanding relationships with Blues plans and other payers.
- Value-Based Care Leadership: The company’s risk-based care arrangements are demonstrating measurable outcomes, including reduced inpatient admissions and improved treatment adherence in oncology care.
- Medicaid Rate Alignment: Ongoing discussions with state partners are progressing toward aligning reimbursement rates with current member acuity levels, supporting margin recovery.
- Technology Integration: HealthOS and digital advocacy solutions are reducing administrative friction while improving member and provider experiences, creating competitive differentiation.
- Strategic Acquisitions: Recent acquisitions, such as CareBridge, enhance capabilities in home and community-based services, supporting the integrated care model for complex populations.
How Wall Street Sees Elevance Health Stock
Wall Street analysts maintain a generally positive outlook on Elevance Health, with an average price target of approximately $501 per share, implying about 44% upside from current levels.
Our model suggests additional upside potential based on the successful execution of the company’s strategic transformation.
See analysts’ growth forecasts and price target for Elevance Health stock (It’s free!) >>>
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact Elevance Health’s growth trajectory:
- Medical Cost Trends: Persistent elevation in medical costs, particularly in Medicare Advantage, could pressure margins if not offset by rate adjustments or improved care management.
- Regulatory Changes: Healthcare policy shifts, including updates to Medicare Advantage payments and changes to the Medicaid program, could impact profitability and growth prospects.
- Competition: Intensifying competition in health insurance markets and healthcare services could lead to pressure on pricing and market share.
- Integration Execution: Successfully integrating acquisitions and scaling Carelon services while maintaining service quality presents operational challenges.
- Economic Sensitivity: Economic downturns may impact commercial membership and state Medicaid funding, affecting enrollment and revenue growth.
TIKR Takeaway
Elevance Health presents a compelling transformation story as it evolves from a traditional health insurer into an integrated healthcare platform focused on whole-person care.
The company’s diversified business model, strategic investments in value-based care, and growing Carelon services platform position it well for sustainable growth in the evolving healthcare landscape.
The 57% upside potential over the next 2.5 years, combined with a focus on operational efficiency and strategic innovation, makes Elevance Health attractive for investors seeking exposure to healthcare transformation trends while benefiting from the stability of the insurance business model.
Success will depend on management’s ability to execute the strategic transformation, successfully navigate industry challenges around medical cost trends, and demonstrate the value proposition of integrated care delivery to both members and healthcare partners.
Is ELV stock a buy over the next 24 months? Use TIKR’s Valuation Model alongside analysts’ growth forecasts and price targets to see if it is undervalued today.
Value any stock with TIKR’s Valuation Models (It’s free!) >>>
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
