Morgan Stanley analyst Erin Wright maintained a Buy rating on CVS Health (CVS – Research Report) yesterday and set a price target of $63.00.
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Erin Wright has given his Buy rating due to a combination of factors related to CVS Health’s performance and future outlook. One of the key reasons is the anticipation of clarity in CVS’s fiscal year 2025 guidance, particularly concerning earnings per share and Medicare Advantage enrollment expectations. Although there are challenges in the Medicare Advantage segment, with a focus on prioritizing profitability over growth, the potential for a turnaround in this area could positively impact CVS’s overall performance.
Furthermore, CVS’s underperformance in the Health Care Benefits business in fiscal year 2024 highlights the need for improvement, and Medicare Advantage enrollment will be a critical indicator of this potential turnaround. The expected growth in earnings per share for FY25 also contributes to the positive outlook. Despite some caution due to cost pressures and medical loss ratio misses, CVS shares have seen an increase year-to-date, yet they remain undervalued compared to historical averages, which strengthens the case for a Buy rating.