Analyst Upgrades CVS Shares Amid Potential Breakup Speculation
- CVS Health stock gains after analyst predicts 35% potential increase
- TD Cowen upgrades CVS shares to ‘Buy’ from ‘Hold’
- Price target increased to $85 from $59
- Medicare Advantage plans contribute to earnings growth in 2025
- Reduced OTC benefits and dental allowances in Medicare Advantage plans
- Possible breakup of retail and insurance businesses under consideration
CVS Health Corporation’s stock experienced a climb following an analyst’s prediction of strong earnings growth in 2025, driven by its Medicare Advantage plans. TD Cowen’s Charles Rhyee upgraded CVS shares from ‘Hold’ to ‘Buy’ and increased the price target to $85 from $59. This suggests a 35% increase from the stock’s closing price of $62.92 on Thursday, which is higher than the average analyst price target of $66.14 by FactSet. The healthcare benefits division has faced pressure due to increased medical costs in its insurance business during the Covid-19 pandemic. However, Rhyee mentioned that changes in 2025 Medicare Advantage plans could lower costs and boost earnings. CVS offers these plans through subsidiary Aetna. Reduced OTC benefits and dental allowances may raise consumer out-of-pocket expenses and cut costs for the company. Additionally, there’s an increase in enrollment for four-star or higher rated Medicare Advantage plans, boosting confidence in double-digit EPS growth in 2025. Shares of CVS increased by 3.1% in recent trading to $64.90, with a 20% decline this year. The company’s retail business remains under pressure, and the possibility of separating retail and insurance businesses is being considered.
Factuality Level: 8
Factuality Justification: The article provides accurate information about CVS Health’s stock performance, analyst predictions, and changes in Medicare Advantage plans. It also includes relevant details about the company’s struggles with medical costs and potential breakup possibilities. However, it lacks a clear conclusion or summary.
Noise Level: 3
Noise Justification: The article provides relevant information about CVS Health’s stock performance and analyst predictions for future earnings growth. It also mentions the company’s recent changes in Medicare Advantage plans and potential cost reductions. However, it lacks a comprehensive analysis of long-term trends or possibilities, does not hold powerful people accountable, and does not explore consequences on those bearing risks. Additionally, it could provide more evidence to support claims and offer actionable insights.
Public Companies: CVS Health (CVS)
Key People: Charles Rhyee (Analyst at TD Cowen), Angela Palumbo (Writer)
Financial Relevance: Yes
Financial Markets Impacted: Yes
Financial Rating Justification: The article discusses CVS Health’s stock performance and potential earnings growth, as well as the possibility of a breakup between its retail and insurance businesses. This impacts both the company itself and financial markets, as investors may be influenced by these developments.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: No extreme event is mentioned in the article and it mainly discusses CVS Health stock performance and predictions for future earnings growth.
Move Size: The market move size mentioned in this article is a 3.1% increase in CVS Health stock price after the analyst’s prediction of strong earnings growth in 2025.
Sector: Healthcare
Direction: Up
Magnitude: Medium
Affected Instruments: Stocks
www.barrons.com 
