KeyBanc has reduced its rating on Evolent Health to Sector Weight from Overweight after reviewing the company’s most recent quarterly results and its guidance for 2026. The firm highlighted concerns about an anticipated rise in leverage and a revenue and earnings recovery that appears weighted toward the back half of next year.
The shares are trading at $2.56, close to a 52-week low of $2.52, and have lost roughly 76% of their value over the past 12 months.
Operationally, Evolent reported a solid fourth quarter, with EBITDA coming in about 6% above analyst estimates and costs remaining steady. The company’s management described the quarter as demonstrating broadly sound execution across its businesses.
Despite the better-than-expected Q4, the 2026 guidance did not meet Wall Street consensus and is tilted toward the second half of the year. Management’s outlook incorporates conservative reserving assumptions tied to the launch of new partnership services contracts with Aetna and Highmark, which are expected to delay some of the revenue and EBITDA recovery into later in the year.
KeyBanc projects that Evolent’s debt leverage will grow to roughly 7 times before it potentially begins to come down in late 2026. That revised timing contrasts with KeyBanc’s earlier expectation that leverage would begin decreasing in early 2026.
"We have a deep appreciation for the underlying demand and value prop for EVH’s offerings but feel compelled to move to SW until we gain better visibility into the EBITDA recovery (and leverage reduction)." - KeyBanc analyst Matthew Gillmor
Independent analysis mentioned alongside the company’s results indicates the stock may appear undervalued at current prices, and additional research is available through a comprehensive Pro Research Report platform referenced by market analysts.
Other broker activity has been notable. Piper Sandler cut its price target to $6.00 from $18.00 while retaining an Overweight rating, citing expectations for enrollment declines in the Individual ACA Marketplace and Medicaid - both significant contributors to Evolent’s revenue. Those enrollment pressures are expected as enhanced Advanced Premium Tax Credits expire and work requirements for Medicaid are introduced over the next two years.
Separately, Citizens trimmed its price target to $10.00 from $11.00 but kept a Market Outperform rating. Citizens pointed to more conservative operating margin assumptions for 2026-2027 and the potential for erosion in ACA customer membership, which could weigh on revenues and margins.
The combination of a near-term leverage increase, cautious reserving around new partnership launches, and anticipated enrollment headwinds in key insurance markets underpins recent analyst repositioning on the stock.