On Friday, Mizuho Securities increased its price target for CVS Health (NYSE:CVS) shares to $70, up from the previous $58, while maintaining an Outperform rating on the stock. Currently trading at $65.75, InvestingPro analysis suggests the healthcare giant, with its $82.9 billion market cap, is trading below its Fair Value. The adjustment follows a comprehensive review of the managed care sector after fourth-quarter 2024 earnings reports and the release of annual financial statements.
The analyst at Mizuho, Ann Hynes, provided insights into the rationale behind the price target revision for CVS Health. Hynes noted that after finalizing the models for the managed care group, which took into consideration the recent earnings results and the details within the 10-K filings, there were only slight modifications to the adjusted earnings per share (EPS) estimates. This aligns with broader analyst sentiment, as InvestingPro data shows nine analysts have recently revised their earnings estimates upward for the upcoming period.
In her commentary, Hynes stated, "We are publishing our final models for the managed care group following Q4:24 earnings, to take into account reported results and publication of the 10-Ks." She pointed out that while the price target for UnitedHealth (UNH) was lowered due to a reassessment of the company’s trading multiples amidst market volatility, CVS Health’s price target was increased.
The decision to raise the price target for CVS Health was attributed to the "embedded earnings power of the company," according to Hynes. This reflects a positive outlook on the company’s financial strength and its potential to generate profits.
CVS Health’s new price target of $70 represents a notable increase from the previous target of $58, demonstrating Mizuho’s confidence in the company’s performance and future prospects. The Outperform rating suggests that Mizuho expects CVS Health to perform better than the overall market or its industry peers in the near future.
In other recent news, CVS Health has reported fourth-quarter earnings for 2024 that exceeded consensus expectations, with adjusted earnings per share reaching $1.19, 29% higher than anticipated. The company’s medical loss ratio came in at 94.8%, which was better than expected, contributing to these positive results. Bernstein SocGen Group has responded by raising the price target for CVS Health stock to $71, citing strong performance and potential earnings growth from Aetna, a part of CVS Health. In a strategic move, CVS Health has also sold its Medicare Shared Savings Program business to Wellvana, allowing CVS to retain a minority investment while Wellvana expands its reach in value-based care across 40 states.
Additionally, CVS Pharmacy has launched a new 3-in-1 test for Influenza A, Influenza B, and COVID-19 across 37 states, enhancing its testing and treatment services. The company has streamlined the scheduling process for testing and treatment through its website and mobile app, particularly in states where pharmacists can prescribe antiviral treatments. Meanwhile, the healthcare sector is under scrutiny following a Department of Justice investigation into UnitedHealth Group (NYSE:UNH)’s Medicare billing practices, which has raised concerns about potential implications for other companies, including CVS Health.
In corporate governance, Thermo Fisher Scientific (NYSE:TMO) has appointed Karen S. Lynch, the former president and CEO of CVS Health, to its board of directors, bringing her extensive healthcare experience to the company. These developments highlight CVS Health’s ongoing efforts to expand its healthcare services and adapt to industry challenges.
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