Introducing Valuation Models! 
Key Takeaways:
- The 2-Minute Valuation Model values Elevance Health stock at $509 per share in 2 years.
- That’s a potential 32% upside from today’s price of $385 per share.
- ELV stock is projected to grow EPS by 36% over the next 3 years as value-based care and digital health platforms scale.
- The healthcare stock is trading below its historical valuations, despite leading the industry’s transformation with innovative care delivery models.
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Elevance Health (ELV) is one of the nation’s largest health benefits companies, serving approximately 46 million medical members through its comprehensive healthcare platform that spans health insurance, pharmacy benefits, and innovative care delivery services.
With its integrated approach combining health benefits with Carelon health services and advanced digital platforms, Elevance Health is at the forefront of transforming healthcare to be more affordable, accessible, and personalized while driving improved outcomes through value-based care arrangements.
With ELV stock now trading at $385 per share, Elevance Health presents a compelling opportunity for investors seeking exposure to the healthcare transformation story.
This investment opportunity is enhanced by Elevance Health’s strong market position, innovative technology platforms, and proven ability to generate consistent returns for shareholders.
Let’s examine why this healthcare leader could deliver substantial returns as Elevance scales its integrated care model and benefits from the ongoing digitization of healthcare delivery.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why Elevance Health Stock Looks Undervalued
Forecast
Based on analyst estimates, Elevance Health is expected to achieve steady earnings growth over the next three years as its integrated healthcare model scales and value-based care initiatives drive margin improvements.
EPS is projected to grow from $33.04 in 2024 to $45.06 by 2027, representing a 36% increase over three years.
The growth trajectory shows consistent acceleration driven by platform scaling and operational improvements.
After a modest decline in 2024, Elevance is expected to deliver 4% EPS growth in 2025, followed by strong acceleration with 14% growth in 2026 and 15% growth in 2027.
This earnings growth for ELV stock is likely to be driven by:
- Value-based care expansion: 66% of healthcare spend now in value-based arrangements, indicating potential savings of $100 PMPM (per member per month).
- Carelon platform scaling: Enhanced capabilities in health services driving integrated care delivery.
- Digital innovation: Sydney Health platform and Health OS creating personalized member experiences.
- Pharmacy growth: CarelonRx continues to scale, supported by strategic investments across behavioral health and specialty services.
- Membership growth: Expanding health benefits reach into new markets with 46 million medical members.
- Operational efficiency: Streamlined operations and administrative burden reduction for providers.
For our valuation, we’ll estimate that ELV stock will reach $45 in EPS in 2027.
Check out Elevance Health’s full analyst estimates (It’s free) >>>
Is ELV Stock Undervalued Right Now?
Elevance Health stock trades at around 11x forward earnings, which is below its 10-year historical average P/E of 14x, as shown in the valuation chart.
This compressed valuation creates an attractive entry point for a leading healthcare company with strong competitive moats and exposure to secular trends in the healthcare sector.
For our valuation, we’ll use a forward P/E multiple of 11x, which reflects a reasonable multiple for a stable healthcare company while recognizing the value creation potential from Elevance’s integrated platform approach.
Fair Value of Elevance Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $45
- Conservative forward P/E multiple: 11x
- Expected dividends over the next 2 years: $14
Expected Normalized EPS ($45) * Forward P/E ratio (11x) + Expected Dividends ($14) = Expected Share Price ($509)
The 2-year expected ELV stock price we would get from this valuation is $509 per share.
With Elevance stock currently trading at around $385 per share, this implies a potential upside of 32% over the next two years or a 15% annualized return.
ELV stock is well-positioned to deliver outsized gains to shareholders, given that the broader markets’ average annual returns have been around 10%.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is Analysts’ Target Price for ELV Stock?
Analysts think that Elevance stock could have strong upside today.
Analysts have an average price target of around $510 per share for ELV stock, indicating they see about 30% upside today for Elevance based on its current share price:
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact Elevance Health’s growth trajectory:
- Regulatory uncertainty: Changes in healthcare policy and modifications to government programs could impact margins and membership.
- Competition intensity: Increased competition from traditional insurers and new healthcare entrants.
- Medical cost inflation: Rising healthcare costs could pressure margins if not offset by value-based care savings.
- Technology execution: Successfully scaling digital platforms and integrating acquisitions requires flawless execution.
TIKR Takeaway
Elevance Health presents a compelling value opportunity at current levels. The stock’s upside potential is driven by its leadership position in health benefits, its innovative integrated care model through Carelon, successful value-based care arrangements that generate measurable savings, and advanced digital health platforms.
While ELV stock faces typical healthcare industry headwinds from regulatory uncertainty and cost pressures, its scale advantages, integrated platform approach, and proven ability to drive value through innovation make it uniquely positioned to benefit from the ongoing transformation of healthcare delivery and payment models.
Is ELV stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
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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!
