Guggenheim Upgrade Elevance Health to $414 Target on Margin Expansion Thesis

Based on my comprehensive analysis of Guggenheim’s upgrade of Elevance Health (ELV) and the associated $414 price target, here is the detailed breakdown:

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Guggenheim’s upgraded outlook for Elevance Health centers on several key margin expansion drivers that the firm believes will transform the company’s profitability profile over the coming quarters [1][4].

The Carelon segment (formerly IngenioRx) has emerged as the primary margin catalyst, delivering to approximately [4]. This healthcare services and pharmacy benefit management (PBM) platform represents Elevance’s differentiated integrated care model and is positioned to become the primary earnings growth driver through 2027.

Elevance has demonstrated meaningful progress in its Star ratings performance:

• ~55% of Medicare Advantage members
  now in 4-Star or higher contracts for payment year 2027 (up from ~40%)
• Three contracts achieved 5-Star ratings
• This improvement supports quality-based bonus payments and helps stabilize MA membership retention

The company is deploying “several hundred million dollars” in incremental investments to:

• Scale the HealthOS platform
• Advance AI-enabled clinical support
• Expand digital virtual assistant capabilities
• Increase access to care while reducing administrative costs

Guggenheim views the near-term focus on share repurchases as accretive to EPS and an efficient use of capital given the current valuation discount.

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Metric	Value
Current Price	$366.89
Guggenheim Target	$414.00
Upside Potential	+12.8%
Consensus Target	$408.50
Target Range (Industry)	$320 - $431

The $414 target implies:

• 2026 P/E of approximately 15.0x
  (aligned with current 14.98x multiple)
• ~27x forward EPS
  based on estimated 2026 EPS of ~$15.50
• A premium to the consensus target but within the broader analyst range

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Elevance Health is currently trading at a

:

Metric	Current	5-Year Average	Premium/Discount
P/E Ratio	14.98x	16.50x	-9.2% discount
P/B Ratio	1.89x	2.35x	-19.6% discount
3-Year P/E Range	11.2x - 24.8x	—	Currently in lower quartile

This valuation discount suggests the market has not yet fully priced in the margin improvement trajectory that Guggenheim anticipates [0].

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Company	P/E	Op Margin	Net Margin	ROE	Target Upside
Elevance Health (ELV)	15.0x	3.8%	2.8%	12.9%	+12.8%
UnitedHealth (UNH)	14.2x	6.2%	5.4%	26.8%	+18.3%
Cigna (CI)	10.8x	5.8%	4.2%	14.2%	+26.7%
Humana (HUM)	15.6x	3.1%	2.3%	12.8%	+111.6%
CVS Health (CVS)	8.9x	2.8%	2.1%	8.5%	+29.8%
Industry Average	12.9x	4.4%	3.4%	15.0%	—

• ELV trades at 116% of industry average P/E
  , indicating a premium relative to peers
• However,
  operating margins (3.8%) are only 88% of industry average
  , suggesting valuation is not fully justified by current profitability
• ELV’s margins trail UnitedHealth significantly (3.8% vs 6.2%), yet trade at a slight premium P/E (15.0x vs 14.2x)

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Guggenheim’s optimism must be weighed against notable challenges:

Risk Factor	Impact
Medicaid Margin Pressure	Expected 125 basis points decline in 2026 as rate increases lag acuity trends
Elevated Medical Loss Ratio	Benefit expense ratio at 91.3% (target: ~90.0%)
MA Membership Impact	~150k members lost from service area and plan exits
Star Ratings Ruling	$375M+ hit from star-ratings ruling
Regulatory Uncertainty	Healthcare policy changes could impact reimbursement rates

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Guggenheim’s $414 price target reflects a constructive view on Elevance Health’s ability to

, offsetting near-term Medicaid pressures. The target implies from current levels, suggesting the stock is with catalysts needed to drive further multiple expansion.

The investment thesis hinges on:

1. Carelon delivering sustained high-teens growth
   and margin contribution
2. Medicare Advantage Star ratings improvement
   translating to quality bonuses
3. AI/digital investments
   generating sustainable cost efficiencies
4. Medical cost trends normalizing
   in the Medicaid business

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The chart illustrates Elevance Health’s peer comparisons across P/E ratios, operating margins, historical valuation trends, price target upside potential, and margin drivers relative to competitors.

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[0] 金灵API市场数据 (Market Data API)
[1] Investing.com - “Guggenheim raises Elevance stock price target to $414 on margin outlook” (https://www.investing.com/news/analyst-ratings/guggenheim-raises-elevance-stock-price-target-to-414-on-margin-outlook-93CH-4460075)
[2] Elevance Health 3Q 2025 Earnings Presentation (https://s202.q4cdn.com/665319960/files/doc_financials/2025/q3/3Q2025ELVEarningsPresentation.pdf)
[3] Oliver Wyman - “Analyzing Financial Trends Of Health Insurance In Q1 2025” (https://www.oliverwyman.com/our-expertise/insights/2025/may/health-insurer-financial-insights-q1-2025.html)
[4] Monexa.ai - “Elevance Health Inc. — Carelon Growth vs Margin Pressure” (https://www.monexa.ai/blog/elevance-health-inc-carelon-growth-masks-margin-sq-ELV-2025-09-10)