A Fresh Look at Elevance Health’s Valuation Following New Medical Device Import Investigation

If you are following Elevance Health (NYSE:ELV) right now, you are probably noticing the stock’s price movements following some major news out of Washington. The U.S. Commerce Department has launched a national security investigation into imports of medical equipment and devices. This has raised the specter of new tariffs and supply chain headaches. These are not just headline concerns, as investors quickly recalibrated their expectations around future costs and the level of regulatory complexity that insurers like Elevance Health will have to navigate in the coming months.

This latest uncertainty has fed directly into what was already a challenging year for Elevance Health. Over the past three months, the stock has dropped 13%, while the past year saw a steep 38% decline. Momentum has clearly faded, in spite of steady annual revenue and net income growth. Just days ago, the broader industry was already contending with pressure on margins. Now, new fears around spending and supply reliability are putting investors on edge.

With shares down this year and yet another layer of risk entering the picture, the key question is whether the market is offering a bargain for long-term buyers or is accurately pricing in further disruption.

Most Popular Narrative: 18.4% Undervalued

According to the most popular narrative, Elevance Health is seen as undervalued by 18.4% compared to its estimated fair value. This perspective highlights a disconnect between the company’s current stock price and its potential, as evaluated by market-watchers focusing on long-term growth opportunities and operational efficiency improvements.

Elevance Health’s investment potential over the next 1-3 years lies in balancing risks associated with Medicaid declines, cost management, and regulatory uncertainties against growth opportunities in Medicare Advantage, value-based care, and digital health innovation. Its established market position and diversified portfolio provide resilience. However, operational cost pressures and policy changes will be critical factors influencing performance.

What is really fueling this undervaluation call? There is a bold vision at the heart of this narrative. Behind the scenes, it is a mix of long-term growth levers, recent financial trends, and big bets on digital and integrated care that are shaping the fair value. The narrative suggests a momentum shift could emerge. Find out what assumptions are setting up this potential comeback story.

Result: Fair Value of $390.54 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost inflation and uncertainties around Medicaid reimbursement could quickly undermine optimism that supports the current undervaluation thesis.

Find out about the key risks to this Elevance Health narrative.

Another View: Discounted Cash Flow Model Says Undervalued

When evaluating Elevance Health using our SWS DCF model, a different perspective emerges that also indicates the shares are undervalued. This approach emphasizes the company’s expected future cash flows instead of relying solely on market multiples. Could this model be capturing insights that the market is currently overlooking?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Elevance Health for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Elevance Health Narrative

If these viewpoints do not align with your own analysis or you would rather dive into the details personally, you can craft your own perspective on Elevance Health in just minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Elevance Health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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