Buy Rating on CVS Health: Strategic MA Plan Benefits and Anticipated Double-Digit EPS Growth

CVS Health (CVS – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Charles Rhyee from TD Cowen upgraded the rating on the stock to a Buy and gave it a $85.00 price target.

Charles Rhyee has given his Buy rating due to a combination of factors indicating a positive outlook for CVS Health’s future financial performance. The decision was influenced by the release of the 2025 Medicare Advantage (MA) plan benefits, which show that CVS has achieved significant reductions in over-the-counter (OTC) benefits and dental allowances. This strategic move aligns CVS’s offerings with its competitors and is expected to contribute to a 5-10% reduction in MA enrollment, aligning with CVS’s targets. Moreover, the analyst anticipates that these adjustments will help CVS accomplish a 100-200 basis points improvement in MA margin for 2025.

Additionally, the analysis suggests that a larger proportion of CVS’s MA plan members will be enrolled in 4-star or higher plans, estimated to reach up to 90% in 2025 compared to 73% in the previous year. The significance of this increase lies in the potential for CVS to drive incremental revenue from the Star Ratings system, which rewards higher-quality plans. Rhyee’s outlook also includes an estimation of double-digit earnings per share (EPS) growth for CVS in 2025, with a prediction of a 15% year-over-year increase. This growth projection, coupled with expectations that the company’s adjusted EPS will surpass consensus estimates, underpins the analyst’s confidence in recommending CVS stock as a Buy, with an increased price target.

In another report released on October 2, Mizuho Securities also reiterated a Buy rating on the stock with a $66.00 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.