Elevance Health Inc.ELVNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Terminal value represents 87% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $3,103.50 per share(market-calibrated)

+796.3%

Upside to Fair Value

Current

$346.24

Pure Model

$3,564.24

Fair Value

$3,103.50

Bull Case

$4,419.85

Bear Case

$2,792.80

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $3,564.24.

What's Driving This Ratingfor ELV

✓

CapEx already efficient

CapEx at 0.59% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 5.20% — below the sector mature average of 20.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $40.6B (15.15% margin).

→

Moderate revenue growth

Analyst consensus projects -2.16% revenue growth, fading to 3.00% by Year 10. Revenue reaches $267.8B (vs $199.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 80.13% indicates efficient cash generation. FCF reaches $34.2B by Year 10 (12.76% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.50

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.76%

Cost of Debt

Pre-tax Cost of Debt3.29%

Tax Rate15.63%

After-tax Cost of Debt2.77%

Equity Weight (E/V)70.56%

Debt Weight (D/V)29.44%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (70.56% × 6.76%) + (29.44% × 2.77%)

= 5.59%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$194.8B	$209.4B	$231.3B	$245.1B	$267.8B
EBIT	$10.1B	$10.9B	$12.0B	$25.8B	$40.6B
Tax	$1.6B	$1.7B	$1.9B	$4.0B	$6.3B
NOPAT	$8.5B	$9.2B	$10.1B	$21.8B	$34.2B
+ Depreciation	$1.5B	$1.6B	$1.8B	$1.9B	$2.1B
- Capex	$1.2B	$1.2B	$1.4B	$1.5B	$1.6B
- Δ NWC	-$297M	$615M	$455M	$486M	$538M
Free Cash Flow	$9.2B	$8.9B	$10.1B	$21.7B	$34.2B
Discount Factor	0.947	0.849	0.762	0.683	0.581
Present Value	$8.7B	$7.6B	$7.7B	$14.8B	$19.8B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$34.2B

Terminal Growth Rate3.00%

WACC5.59%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$1.4T

PV of Terminal Value$789.2B

Exit Multiple Method

Year 10 EBITDA$42.6B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$1.0T

PV of Terminal Value$594.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$121.5B

PV of Terminal Value$789.2B

Enterprise Value$910.7B

(-) Net Debt$22.6B

Equity Value$888.1B

Shares Outstanding222M

Price per Share$4,004.25

Exit Multiple Method

PV of Projected FCFs$121.5B

PV of Terminal Value$594.0B

Enterprise Value$715.5B

(-) Net Debt$22.6B

Equity Value$693.0B

Shares Outstanding222M

Price per Share$3,124.23

Pure Model Fair Value

$3,564.24

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
3.59%	$4,715.31	$4,511.53	$4,317.49	$4,132.68	$3,956.61
4.59%	$3,891.86	$4,367.51	$4,317.49	$4,132.68	$3,956.61
5.59%	$3,056.02	$3,268.99	$3,564.24	$4,000.85	$3,956.61
6.59%	$2,536.70	$2,652.28	$2,800.08	$2,995.73	$3,266.96
7.59%	$2,170.05	$2,240.16	$2,325.54	$2,431.81	$2,567.69

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$2,792.80

706.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.63

Base Case

$3,564.24

929.4% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.50

Bull Case

$4,419.85

1176.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.43

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-2.16%

Year 3 Revenue Growth4.45%

Year 5 Revenue Growth2.94%

Year 7 Revenue Growth2.96%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin5.20%

Terminal EBIT Margin20.00%

Tax Rate15.63%

Historical Capex / Rev0.59%

NWC / Revenue6.89%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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