Is ELV a good stock to buy? We came across a bullish thesis on Elevance Health, Inc. on Grillo Insights’s Substack by Eric García. In this article, we will summarize the bulls’ thesis on ELV. Elevance Health, Inc.’s share was trading at $289.24 as of March 23rd. ELV’s trailing and forward P/E were 11.56 and 11.39 respectively according to Yahoo Finance.
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Elevance Health, Inc., together with its subsidiaries, operates as a health benefits company in the United States. ELV reported Q4 and full-year 2025 results reflecting a challenging environment, yet the company is strategically positioned to recover profitability. Consolidated operating revenue reached $49.3 billion in Q4 (+10% YoY) and $197.6 billion for the full year (+13% YoY), driven by premium growth, acquisitions, and Medicare Advantage membership expansion.
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Despite top-line strength, profitability contracted: full-year adjusted EPS of $30.29 declined 8.3% YoY, partially offset by ~$3.75 per share of non-recurring tax benefits. Elevated medical costs increased the benefit expense ratio to 90% for the year, and adjusted operating margins fell to 3.8% from 5.3% in 2024.
Segment performance was mixed. Health Benefits revenue rose 11% to $167.1 billion, but operating gain dropped 34% with margins at 2.5%, reflecting Medicaid and Medicare Advantage pressures. Medicaid remains the most stressed area, with membership declines, rising costs, and negative operating margins expected in 2026.
Medicare Advantage is being deliberately managed for margin improvement, though enrollment may decline 15-19%. Individual ACA plans are stable, while commercial accounts remain solid. Carelon, including CarelonRx and Carelon Services, posted strong growth (+33% overall), supported by risk-based solutions, acquisitions, and external client expansion, though margins moderated slightly.
Management is focused on operational discipline, advanced analytics, specialty pharmacy programs, patient advocacy expansion, and real-time prior authorizations, alongside recalibrated long-term margin targets reflecting portfolio mix shifts. Cash flow remains healthy at $4.3 billion in 2025 with $4.1 billion returned to shareholders, and 2026 projections target ~$5.5 billion.
While near-term headwinds are significant, Elevance’s disciplined execution, margin-focused strategy, and Carelon growth provide a path to sustainable EPS growth and long-term value creation, making it a cautiously bullish story with upside tied to successful execution and Medicaid stabilization.
Previously, we covered a bullish thesis on Elevance Health, Inc. (ELV) by Waterboy Investing in January 2025, which highlighted the company’s dominant market position, strong historical growth, robust cash flow generation, and attractive valuation following a sharp drawdown. ELV’s stock price has depreciated by approximately 24.52% since our coverage, driven by rising medical cost ratios and Medicare Advantage reimbursement concerns across managed-care insurers. Eric García shares a similar view but emphasizes on near-term profitability pressures and margin compression.
Elevance Health, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 78 hedge fund portfolios held ELV at the end of the fourth quarter which was 82 in the previous quarter. While we acknowledge the risk and potential of ELV as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ELV and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
