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4 big analyst picks: CVS picks up upgrade on 'attractive risk/reward,' per Wolfe

Published Sep 12, 2023 05:54AM ET
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Investing.com -- Here is your Pro Recap of the biggest analyst picks you may have missed since Friday: upgrades at CVS Health, Brown Forman, Geron, and a buy initiation for Block.

InvestingPro subscribers got this news first. Never miss another market-moving headline.

CVS Health stamped with Outperform at Wolfe

Wolfe Research upped CVS Health (NYSE: NYSE:CVS) to Outperform from Peerperform with a price target of $80.00, prompting the shares to shoot higher after word of the upgrade hit the wires intraday Monday.

The firm believes potential adjustments to CVS's long-term earnings outlook, coupled with confidence in a 2025 recovery in its Star rating, could lead to substantial improvements in medical advantage profits.

Wolfe wrote, "we see potential for CVS to take steps to more reasonably / conservatively set expectations for LT earnings growth in 2025 and beyond in the high single digit range." The analysts also said CVS's key PPO plan could gain a 4-Stars rating at the Centers for Medicare & Medicaid Service (CMS), which they note could yield significant financial benefits.

They added that, while these gains may not fully impact 2025 earnings per share - as new Aetna management has investment targets in that business to stimulate growth - they say that this sets the stage for CVS to meet or exceed earnings expectations, given more realistic targets at December Investor Day for 2025 and beyond.

Shares closed Monday's session higher by 4.4% to $68.75, and was recently up 0.6% in Tuesday's premarket.

Block started at Buy at Berenberg

Berenberg initiated coverage on Block (NYSE:SQ) with a Buy rating and a price target of $75.00 on Monday, as reported in real time on InvestingPro.

The analysts wrote in their note to clients:

Block’s improving outlook for profitability reflects significant operating leverage: While during the past several years Block has consistently generated strong gross profit growth, the company has come under criticism from investors for its lack of bottom-line profitability.

The analysts said that, despite that criticism, recent efforts by management to control operating expenses have revealed significant potential for operational efficiency within Block's business model. Berenberg believes Block has now reached an inflection point in its profit potential, and that it still has room to further fatten its profitability.

Shares closed Monday up 1.6% to $53.94.

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Geron gets Buy rating at Goldman

Goldman Sachs upgraded biotech Geron (NASDAQ:GERN) to Buy from Neutral on Tuesday with a price target of $4.00. Shares were climbing nearly 7% in recent premarket trading.

This move comes as Geron's new drug application for imetelstat, aimed at treating a lower-risk form of blood cancer MDS, was recently accepted, with the Federal Drug Administration set to review the drug by June 16 of next year. Goldman believes imetelstat is likely to gain approval, potentially leading to $1.5 billion in peak sales.

The upgrade follows the company's appointment Monday of new CFO Michelle Robertson, effective later this month, to replace the retiring current CFO Olivia Bloom.

Shares were recently changing hands at $2.50 in the premarket.

Brown Forman, maker of Jack Daniel's, upped to Outperform

Bernstein upgraded spirits purveyor Brown Forman (NYSE:BFb) to Outperform from Market Perform on Monday with a price target of $76.40.

The firm noted that its initial Market Perform rating last year was based on Brown Forman's historical pricing limitations, which made it challenging to predict substantial margin expansion after years of compression. “But things just got a lot sweeter, and today we upgrade Brown-Forman to Outperform,” mentioned Bernstein.

Shares added 1.1% to $64.99.

***

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4 big analyst picks: CVS picks up upgrade on 'attractive risk/reward,' per Wolfe
 

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Comments (1)
Derick Lim
Derick Lim Sep 12, 2023 8:29AM ET
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Believe potential .....typical fortune telling prediction......
Joan Yape
Joan Yape Sep 12, 2023 8:29AM ET
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