Evercore initiates coverage of Elevance Health, backs earnings outlook

Evercore ISI initiates coverage of health insurer Elevance Health ELV.N with an "in line" rating and PT of $345, implying an upside of around 10% from current levels

Brokerage says ELV's diversified portfolio supports earnings in the current environment and expects the company to meet or exceed its 2026 guidance

Warns of downside risk to Medicaid margins from 2027, as possible work requirements could reduce enrollment and leave a member base that requires more care adding to costs

Estimates the downside risk to hit ELV's 2027 adjusted earnings forecast by 10%-30% if state reimbursement rates lag rising medical costs

Over the longer term, Evercore sees scope for 12% or higher earnings growth, supported by Carelon, ELV's healthcare services arm, and cross-selling across ELV's insurance base

As of last close, ELV shares down 11% YTD