Elevance Health is undervalued, this fund manager says

Goodreid Investment Counsel President and CEO Gordon Reid said on BNN Bloomberg’s Market Watch on Oct. 22 that while the U.S. health insurance sector has faced pressure through most of 2025, he expects it to stabilize and recover, highlighting Elevance Health (Elevance Health Stock Quote, Chart, News, Analysts, Financials NYSE:ELV) as a relative value opportunity.

“UnitedHealth and the situation it is in has pushed down for most of the year,” Reid said. “Elevance is in the same space, but it’s smaller; I think it’s number two in the space, but it is smaller than UnitedHealth.”

Reid said he favours Elevance because of its valuation and structure, noting that the Indianapolis-based insurer trades at roughly half the multiple of UnitedHealth despite similar growth rates.

“Health insurance is an integral part of the health solution in the United States,” he said. “Elevance we like because it’s inexpensive. Its growth rates are comparable, and its structure is somewhat different.”

He said that roughly two-thirds of Elevance’s commercial business operates under a fee-based model rather than a risk-based one.

“An employer takes on some of the risk, which allows Elevance to lower premiums,” Reid said. “That’s a safer way for an insurance company to manage.”

Elevance reported its latest earnings on Oct. 21, which Reid described as “mixed, but primarily good because they created a floor.” He said margins were “a little bit high and certainly historically high, but that was expected.”

“I think the market has to digest that and move off it,” Reid added. “This whole group is poised for a rebound and needs to find a floor before moving quite a bit higher.”

Shares of Elevance have fallen 19.4% over the past 12 months but remain up 27.3% over five years. Of the analysts covering the stock, 14 rate it “Buy” and 10 “Hold,” with a consensus target of US$377.95.

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