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Long-Term Opportunity

In this video, Chuck Carnevale, co-founder of FAST Graphs, aka Mr. Valuation revisits Elevance Health (formerly Anthem), an undervalued long-term opportunity, a major U.S. for-profit health insurer. Chuck argues that recent declines in ELV’s stock price—down nearly 50% since September 2024—are a significant overreaction to modest earnings pressure, particularly from government programs like Medicaid, Medicare, and the Affordable Care Act.

Despite these short-term issues, the long-term opportunity for this company’s fundamentals remain strong. Management recently revised 2025 earnings guidance to $30 per share, representing only a 9% decline and still marking the third-highest earnings year in the company’s history. The company also maintains a low dividend payout ratio, with ample free cash flow and operating cash flow (yielding over 8% and 9%, respectively) to comfortably cover its 2.4% dividend.

Chuck uses FAST Graphs to demonstrate how ELV’s price consistently returns to its intrinsic value (represented by the 15 P/E orange line), despite periods of over- or undervaluation driven by investor emotion. Today, ELV trades at a blended P/E of just 9, which Chuck believes undervalues its long-term prospects.

(Click on image to enlarge)

Elevance serves over 118 million Americans, with diversified segments including Carelon (healthcare services) and Wellpoint (government and commercial health plans). It’s the second-largest U.S. health insurer behind UnitedHealth and benefits from its scale, product diversity, and technological investments. While margins and cash flows have declined somewhat, metrics like return on equity and assets remain solid.

Forecast revisions have trimmed expectations—2026 EPS estimates fell from $39 to $33.25—but even with conservative projections, Chuck estimates potential annualized returns of 25–35%, with the possibility of doubling by year-end 2025 if the stock reverts to fair value. He highlights Elevance’s continued revenue growth (Q2 2025 revenue up 14.3% YoY) and strong analyst scorecard, reinforcing confidence in forward estimates.

Chuck concludes that while political and regulatory shifts are causing short-term uncertainty, Elevance’s business remains fundamentally sound. For long-term investors, he views today’s price as a rare long-term opportunity to invest in a high-quality, A-rated company with strong long-term opportunity upside. He emphasizes that short-term volatility should not deter investors with a multi-year time horizon.

Video Length: 00:23:39

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