Elevance Health (ELV): Evaluating Valuation as Legal Scrutiny Rises Over Medicaid and Antitrust Lawsuit

Elevance Health (NYSE:ELV) has been drawn into the spotlight after being named a defendant in a significant federal antitrust lawsuit. The company is also facing fresh shareholder claims about possible misrepresentations related to Medicaid costs and premiums.

See our latest analysis for Elevance Health.

Recent headlines around lawsuits and shareholder claims have added pressure to Elevance Health’s investment story, but the bigger picture is steady. Recent share price returns have been essentially flat, and its 1-year total shareholder return slipped just below break-even. The real question is whether this legal uncertainty will weigh on momentum, or if long-term profitability and insider confidence turn the tide.

If these headlines have you rethinking your healthcare exposure, it might be a good time to explore fresh opportunities with our See the full list for free.

With shares trailing the broader healthcare sector despite resilient financial growth, investors are left to consider whether recent legal headlines have created a window to buy quality at a discount or if the market already reflects future prospects.

Most Popular Narrative: 3.2% Undervalued

Elevance Health’s most popular narrative assigns a fair value that is slightly above the latest closing price of $349.94. This valuation suggests analysts see hidden strengths that outweigh current headlines, and it sets the context for a key assumption driving their projections.

The company is aggressively leveraging advanced analytics, digitization, and AI-enabled tools to streamline clinical workflows, automate processes, reduce fraud, and improve cost management. These initiatives are expected to lower administrative costs, increase operational efficiency, and gradually stabilize or expand net margins.

Read the complete narrative.

Can digital transformation really be the springboard for Elevance Health’s future profitability? The financial model rests on bold assumptions for revenue growth, margin recovery, and shrinking share count. What if even one variable surprises? See which projections analysts are betting the fair value on.

Result: Fair Value of $361.39 (UNDERVALUED)

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

However, persistent Medicaid cost pressures and delays in rate recovery could still pose challenges for Elevance Health’s path to stable margins and future growth.

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

Another View: What If the Market Is Right?

Some investors look to the price-to-earnings ratio for a more practical take. Elevance Health trades at 14.7 times earnings, which is slightly above its peer average of 14.1 but well below the broader healthcare industry’s 21.3. Our analysis suggests a fair ratio could be as high as 33. That wide gap signals both potential upside for a rerating and possible downside if challenges persist. Is the current valuation an opportunity, or a warning that skepticism runs deeper than the headlines?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Elevance Health Narrative

If you’ve got a different perspective or want to test the assumptions yourself, it only takes a few minutes to build your own view with Do it your way.

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

Looking for more investment ideas?

Why limit yourself to the usual stocks? Make your next smart move with these engaging strategies that countless investors are already taking advantage of.

• Uncover low-priced stocks with solid financials by getting started with these 3573 penny stocks with strong financials that could outperform when the market surprises everyone.
• Target steady passive income streams by seeing which companies power strong future payouts with these 19 dividend stocks with yields > 3% yielding over 3%.
• Position yourself for tomorrow’s breakthroughs by checking out these 25 AI penny stocks that show real potential in artificial intelligence innovation.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com