TD Cowen analyst Charles Rhyee maintained a Buy rating on CVS Health (CVS – Research Report) yesterday and set a price target of $99.00.
Charles Rhyee has given his Buy rating due to a combination of factors impacting CVS Health’s future earnings and growth potential. The company’s management has set an adjusted earnings per share (EPS) guidance of over $8.30 for 2024, which Rhyee sees as attainable. This forecast hinges on the assumption that medical cost trends will moderate in the second half of 2024. Additionally, CVS Health’s focus on the Medicare Advantage (MA) market could benefit from regaining 4-star ratings and the outcomes from the final MA rate notice expected in April. While there are concerns about the impact of higher utilization seen in the fourth quarter of 2023 and increased MA enrollment, the management’s strategies seem poised to handle these challenges effectively.
Furthermore, Rhyee’s optimism is bolstered by CVS Health’s target for low double-digit adjusted EPS growth, which suggests a strong recovery in 2025. Despite the anticipated negative impact from the loss of 4-star ratings in 2024, the company is expected to see a significant portion of MA lives enrolled in 4-star plans in 2025. The potential for a more favorable Final MA Rate notice than the proposed cut also plays a crucial role in the positive outlook. CVS Health’s proactive measures, such as the strategic use of flex cards in their 2024 bids, are indicative of the company’s adaptability and commitment to maintaining a competitive edge in the market.
In another report released on February 7, Morgan Stanley also maintained a Buy rating on the stock with a $92.00 price target.
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CVS Health (CVS) Company Description:
Headquartered in Rhode Island and founded in 1963, CVS Health Corp. is a healthcare company in the U.S. that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; Aetna, a health insurance provider, among many other brands.
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