With a market cap of $76.5 billion, Elevance Health, Inc. (ELV) is one of the largest U.S. managed healthcare and health-insurance companies, providing medical, pharmacy, behavioral, and care-delivery services through a diversified portfolio of brands and subsidiaries. Headquartered in Indianapolis, Indiana, the company operates in four segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other. Elevance Health’s stock has struggled to keep pace with both the broader market and its hea ...

Core Insights - Sequoia Strategy achieved a return of 9% in Q4 2025, outperforming the S&P 500 Index which returned 2.7% during the same period [1] - For the entire year of 2025, Sequoia Strategy delivered a return of 21.9%, compared to 17.9% for the S&P 500 Index [1] - The Strategy focuses on investing in high-quality, fundamentally and financially strong businesses at reasonable prices, covering a wide range of sectors, business styles, and regions [1] Company Performance - Elevance Health, Inc. (NYSE:ELV) detracted from the Strategy's performance in Q4 2025, with a one-month return of -11.65% and a 12-month decline of 16.29% [2] - As of February 9, 2026, Elevance Health, Inc. had a market capitalization of $72.281 billion [2] - The investments in Elevance Health and UnitedHealth Group Inc. were initiated opportunistically, with Elevance shares purchased two years after a significant impact from COVID-19 on healthcare utilization [3]

Group 1: U.S. Health Insurance Industry - A U.S. House Judiciary Committee investigation into alleged fraud within the Affordable Care Act (ACA) premium subsidy program has intensified, with subpoenas issued to eight prominent health insurers including Elevance Health (ELV), CVS Health (CVS), Centene (CNC), Guidewell, and Oscar Health (OSCR) [2] - The investigation focuses on potential fraud related to premium subsidies in the individual market, particularly as enhanced premium tax credits for ACA coverage expired on January 1 [2] - Reports suggest that without subsidy extensions, premiums for approximately 22 million ACA enrollees could more than double [2] Group 2: European Defense Industry - European nations are advancing discussions to bolster their defense capabilities and reduce reliance on the United States, with proposals for a phased transfer of military responsibilities from the U.S. to Europe over the next five to ten years [3] - This initiative is driven by concerns over potential shifts in U.S. foreign policy and aims to present a plan to the U.S. before the annual NATO leaders' summit in The Hague in June [3] - The discussions involve commitments to increase European defense spending and military capabilities, potentially including the establishment of a joint armed force of at least 100,000 troops [3] Group 3: Eurozone Liquidity Conditions - The European Central Bank (ECB) reported that 37 million euros were borrowed through its overnight loan facility, while a significantly larger amount of 2394.41 billion euros was deposited using the overnight deposit facility [5] - These figures provide insight into liquidity conditions within the Eurosystem, with the marginal lending facility rate at 2.40% and the deposit facility rate at 2.00%, both remaining unchanged [5]

Core Insights - Elevra Lithium has reached a commercial milestone with a non-binding memorandum of understanding (MoU) to supply spodumene to the North American market, potentially aligning with a local downstream partner [1][4] Group 1: MoU Details - Under the MoU, Elevra could supply Mangrove with up to 144,000 tonnes of spodumene per year for an initial five-year term starting in calendar year 2028, ramping up to 144,000 tonnes per annum by calendar year 2030 [2] - Mangrove plans to process the spodumene concentrate in eastern Canada, utilizing a modular, scalable electrochemical refining platform to convert feedstocks into battery-grade lithium hydroxide [3] Group 2: Strategic Implications - Elevra's CEO, Lucas Dow, indicated that the partnership with Mangrove may enhance cost efficiency and competitiveness, while also supporting the Canadian government's initiative to establish a secure critical minerals supply chain [4] - The MoU strengthens Elevra's commercial position in the lithium market, which is critical for the growing electric vehicle (EV) sector [4] Group 3: Company Overview - Elevra has multiple lithium projects in North America, including the North American Lithium project in Québec and a 60% stake in the Moblan lithium project, as well as the Carolina lithium project in the U.S. [5] - Elevra's stock price increased by 11.8%, reaching $7.20 per share following the announcement [6]

Revenue Sources - Approximately 32% of total consolidated revenues were generated from U.S. government agencies for the years ended December 31, 2025, 2024, and 2023, respectively [25]. - The Medicaid business includes managed care alternatives through public-funded healthcare programs, covering various services in 17 states and Puerto Rico [41]. - Approximately 53.5% of premium revenue and 18.7% of medical membership were subject to minimum MLR regulations for the year ended December 31, 2025 [99]. - Approximately 54.2% of premium revenue and 18.4% of medical membership were subject to minimum MLR regulations for the year ended December 31, 2024 [99]. Health Benefits and Services - The Health Benefits segment offers a comprehensive suite of health plans and services, with key drivers including membership levels, premium pricing, and medical cost trends [27]. - CarelonRx, which includes pharmacy services, was enhanced by the acquisition of Paragon Healthcare, Inc. in March 2024, contributing to affordability and outcomes for members [27]. - The Carelon Services segment integrates physical, behavioral, pharmacy, and social-care capabilities, targeting chronic and complex populations [28]. - Carelon integrates services to deliver whole health affordably, powered by analytics [38]. - Carelon Health provides value-based solutions and comprehensive care management services, including home health and behavioral health management [47]. - A comprehensive behavioral health case management program supports members with various conditions, promoting access to appropriate treatment and community resources [71]. - The company has implemented a "Food as Medicine" strategy across multiple business lines to address food and nutrition insecurity among its members [73]. - The company focuses on care coordination based on nationally recognized criteria to improve inpatient and outpatient care, aiming to reduce preventable hospital admissions [75]. - The company has developed partnerships with network physicians and hospitals to enhance healthcare quality and social impact services, recognized by NCQA accreditation [76]. - The company utilizes HEDIS measures to improve care for chronic diseases and reduce healthcare disparities, including diabetes and heart disease management [77]. Market Position and Competition - The managed care industry is highly competitive, with intense competition driven by aggressive marketing, pricing, and new strategic alliances [43]. - The company leverages its BCBS brand for greater recognition and competitive positioning, being the largest participant in its branded markets [45]. - Pricing strategies are based on predictive modeling and proprietary research, aiming for growth through market expansions and regulatory changes [46]. - CarelonRx pricing is competitive, utilizing discounts off average wholesale prices and rebate projections to maintain market competitiveness [54]. Regulatory Environment - The Consolidated Appropriations Act of 2023 allows states to begin removing ineligible beneficiaries from Medicaid programs, impacting enrollment dynamics [86]. - The Inflation Reduction Act of 2022 includes provisions that may increase Public Exchange coverage premiums after enhanced PTCs expire on December 31, 2025 [88]. - The ACA has introduced new risks and regulatory challenges, significantly impacting the company's business model and product administration [96]. - The company anticipates ongoing regulatory guidance from CMS regarding Medicare ratings and quality bonus payments, which could affect financial recoveries [97]. - The company is required to comply with various BCBSA license agreements, including maintaining at least 80% of annual combined local net revenue under the BCBS names and marks [80]. Financial Performance - Net cash provided by operating activities decreased to $4,290 million in 2025 from $5,808 million in 2024, a decline of $1,518 million [371]. - Total sources of cash fell to $6,458 million in 2025, down from $12,815 million in 2024, a decrease of $6,357 million [371]. - Issuances of short- and long-term debt decreased significantly to $629 million in 2025 from $6,200 million in 2024, a drop of $5,571 million [371]. - The company repurchased and retired $2,605 million of common stock in 2025, compared to $2,900 million in 2024, a reduction of $295 million [371]. - Cash dividends paid increased slightly to $1,529 million in 2025 from $1,508 million in 2024 [371]. - The net increase in cash and cash equivalents was $1,203 million in 2025, compared to an increase of $1,828 million in 2024 [371]. - The company reported a total of $69 million from sales, maturities, calls, and redemptions of investments in 2025, down from $586 million in 2024 [371]. - The company had no purchases of investments in 2025, while it had $2,700 million in 2024 [371]. - Other sources of cash, net, amounted to $1,391 million in 2025, with no contributions in 2024 [371]. - The effect of foreign exchange rates on cash and cash equivalents was a decrease of $5 million in 2025 [371]. - As of December 31, 2025, consolidated cash, cash equivalents, and investments totaled $37,236 million, an increase of $1,520 million from December 31, 2024 [374]. - The debt-to-capital ratio was 42.1% as of December 31, 2025, down from 43.0% in 2024, indicating improved leverage [378]. - The company expects to receive approximately $2,100 million in dividends from subsidiaries during 2026, compared to $2,543 million received in 2025 [386]. - Future debt and estimated interest payments total $54,160 million, with $2,490 million due within the next twelve months [395]. - The company has a remaining Board authorization of $6,695 million for common stock repurchases as of December 31, 2025 [392]. - The 5-Year Facility was amended to increase available credit from $4,000 million to $5,000 million and extend the maturity date to September 2030 [381]. - Cash disbursements are primarily driven by claims payments, administrative expenses, and capital expenditures, with adequate liquidity expected from cash on hand and credit facilities [388]. - The company maintains a commercial paper program of up to $5,000 million, with no amounts outstanding as of December 31, 2025 [384]. - Future estimated payments for operating leases are $743 million, with $159 million due within the next twelve months [395]. - The company is in compliance with all debt covenants under the 5-Year Facility as of December 31, 2025 [382]. Employee and Culture - The company invested an average of approximately 26 hours of training and development per associate in 2025 [125]. - The company’s employee population consisted of approximately 97,100 individuals as of December 31, 2025, with 99% employed full-time [118]. - The company completed a gender and race pay equity review in 2025, finding female associates earn more than 99 cents for every dollar earned by similarly situated male associates [124]. - The company’s culture and engagement initiatives include over 20% of the U.S. workforce participating in Business Resource Groups in 2025 [122]. Transparency and Compliance - The Health Plan Transparency Rule requires the company to disclose detailed pricing information on a monthly basis, starting from July 2022 [114].

Upgrades - DA Davidson upgraded Q2 Holdings (QTWO) to Buy from Neutral with an unchanged price target of $82, citing an attractive entry point due to the stock's pullback over the last 6-8 months [2] - Citi upgraded JetBlue (JBLU) to Neutral from Sell with a price target of $6, up from $4, noting "upside risks" and strategic optionality for the airline [3] - Morgan Stanley upgraded Affirm (AFRM) to Overweight from Equal Weight with a price target of $76, down from $83, highlighting a compelling risk/reward scenario following recent stock weakness [3] - Daiwa upgraded Visa (V) to Outperform from Neutral with an unchanged price target of $370, revising earnings forecasts upward in light of Q1 earnings [4] - Northland upgraded Palantir (PLTR) to Outperform from Market Perform with a price target of $190, up from $185, following the company's strong Q4 results [4] Downgrades - Piper Sandler downgraded Adobe (ADBE) to Neutral from Overweight with a price target of $330, down from $470, due to concerns over seat-compression and vibe coding narratives [5] - RBC Capital downgraded Elevance Health (ELV) to Sector Perform from Outperform with a price target of $358, down from $392, citing softer than expected 2026 guidance [5] - BofA downgraded Figure (FIGR) to Underperform from Neutral with a price target of $42, down from $43, noting a significant valuation gap compared to Coinbase [5] - BNP Paribas downgraded Exxon Mobil (XOM) to Underperform from Neutral with a price target of $125, up from $114, based on valuation concerns [5] - Roth Capital downgraded Coterra Energy (CTRA) to Neutral from Buy with a price target of $28, down from $30, believing no higher offers will materialize at this time [5]

Core Viewpoint - Investors in Elevance Health, Inc. should closely monitor stock movements due to significant implied volatility in the options market, particularly the Mar 20, 2026 $460 Put option [1] Company Analysis - Elevance Health currently holds a Zacks Rank of 4 (Sell) within the Medical Services industry, which is positioned in the bottom 26% of the Zacks Industry Rank [3] - Over the past 60 days, no analysts have raised their earnings estimates for the current quarter, while seven analysts have lowered their estimates, resulting in a decrease of the Zacks Consensus Estimate from $10.79 per share to $10.35 [3] Options Market Insights - The high implied volatility surrounding Elevance Health shares suggests that options traders anticipate a significant price movement, indicating potential trading opportunities [4] - Seasoned options traders often seek high implied volatility options to sell premium, aiming to benefit from the decay of options value if the underlying stock does not move as much as expected [4]

Core Viewpoint - Elevance Health Inc. (NYSE:ELV) is considered one of the most undervalued large-cap stocks currently available for investment, despite recent adjustments in price targets by various analysts [1]. Analyst Ratings and Price Targets - Barclays has lowered its price target for Elevance Health to $393 from $404 while maintaining an Overweight rating [1]. - Guggenheim analyst Jason Cassorla has also reduced the price target to $396 from $414, keeping a Buy rating based on recalibrated 2026 estimates following the company's Q4 2025 report [1]. - Deutsche Bank raised its price target to $332 from $320, maintaining a Hold rating, suggesting that the company's 2026 outlook may represent a floor [2]. - UBS has lowered its price target to $400 from $425 while maintaining a Buy rating [3]. Company Overview - Elevance Health Inc. operates as a health benefits company in the US, with four segments: Health Benefits, CarelonRx, Carelon Services, and Corporate & Other [3].

Core Insights - Elevance Health Inc (NYSE:ELV) experienced its largest single-day percentage gain since May 2024, reporting profits of $547 million, although this was not sufficient to recover from its worst day since March 2020 due to proposed Medicare Advantage payment rate increases of only 0.09% for 2027 [1] - The stock is currently near a trendline with historically bullish implications, which may assist in reducing its 14.2% year-over-year deficit [1] Technical Analysis - According to Schaeffer's Senior Quantitative Analyst, ELV is within 0.75 of its 100-day moving average's 20-day average true range (ATR), having remained above this level 80% of the time over the last two weeks and 80% of the past 42 trading sessions. This pattern has historically led to an average gain of 5.7% one month later [3] - A similar upward movement from the current position could push ELV back above $363 [3] Market Sentiment - The health insurance stock's 50-day put/call volume ratio at major exchanges is higher than 99% of annual readings, indicating that an unwinding of pessimism could provide positive momentum for the shares [4] - Options for ELV are currently affordably priced, with a Schaeffer's Volatility Index (SVI) of 33% ranking in the 27th percentile of annual readings, suggesting that the stock has exceeded option traders' volatility expectations over the past year [5]

Core Insights - Elevance Health, Inc. (ELV) reported Q4 2025 adjusted EPS of $3.33, exceeding the Zacks Consensus Estimate by 7.3% and reflecting a 3.1% year-over-year increase [2] - Operating revenues increased by 9.6% year over year to $49.3 billion, although this figure fell short of consensus estimates by 0.5% [2] Financial Performance - The quarterly earnings were bolstered by strong premium growth, with premiums totaling $40.7 billion, a 12.3% year-over-year increase [5][10] - The Carelon division experienced a significant revenue increase of 27% year over year, reaching $18.7 billion, driven by acquisitions and scaling risk-based services [10][11] - Health Benefits segment revenues rose 11% year over year to $41.8 billion, surpassing estimates [8] Membership and Enrollment - Medical membership stood at approximately 45.2 million as of December 31, 2025, a decline of 1.1% year over year, primarily due to a drop in Medicaid membership [4] - Medicare Advantage membership growth partially offset the decline in overall medical membership [4] Expenses and Margins - Total expenses increased by 10.5% year over year to $49.5 billion, exceeding estimates [6] - The adjusted operating margin deteriorated by 110 basis points year over year to 0.8% [6] Cash Flow and Capital Deployment - Elevance Health reported cash and cash equivalents of $9.5 billion, a 14.5% increase from the end of 2024 [13] - The company generated net cash flow from operations of $4.3 billion in 2025, a decline of 26.1% from the previous year [14] - Share buybacks amounted to $471 million in Q4, with a remaining capacity of approximately $6.7 billion [15] Full-Year Results and Outlook - For the full year 2025, revenues reached $197.6 billion, up from $175.2 billion in 2024, driven by increased premium yields [16] - The company anticipates adjusted EPS for 2026 to be at least $25.50, indicating a 15.8% decline from 2025 [17] - Operating revenues are expected to see a low-single digit decline in 2026, with medical enrollment projected between 43.2 million and 43.9 million [18]