CVS Health (CVS) stock soared about 15% yesterday after posting upbeat fourth-quarter results, with revenues and earnings surpassing analysts’ expectations. Following the Q4 earnings release, two Top-rated Wall Street analysts upgraded CVS stock’s rating to Buy and raised their price targets. Both analysts are optimistic about the company’s turnaround strategy and see growth potential in CVS Health’s insurance unit, Aetna.
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CVS Health owns a retail pharmacy chain. It also operates as a pharmacy benefits manager (PBM) and health insurance provider.
Analysts Optimistic about Aetna’s Growth Prospects
In response to CVS Health’s positive Q4 results, Cantor Fitzgerald analyst Sarah James upgraded CVS Health stock to Buy from Hold and raised the price target to $71 (12.3% upside potential) from $62. She cited confidence in CVS’s efforts to improve performance, such as cost-cutting measures, and its ability to improve margins for Medicare Advantage plans by FY27. Also, James believes the Aetna business to be undervalued, pointing to its future growth potential.
Similarly, another Top-rated analyst, Michael Cherny from Leerink Partners, upgraded CVS Health to Buy from Hold, reflecting optimism about the company’s long-term prospects. Also, he lifted CVS stock’s price target to $75 (18.6% upside) from $55.
The analyst noted that CVS Health’s Aetna and healthcare benefits segments are stabilizing. Further, Cherny anticipates that strategic changes at the insurance unit and consistent performance in the PBM and Health Services businesses might lead to an increase in his estimates for CVS Health.
Is CVS a Good Stock to Buy Now?
Turning to Wall Street, CVS stock has a Strong Buy consensus rating based on 13 Buys and three Holds assigned in the last three months. At $63.53, the average CVS Health price target implies a limited 0.49% upside potential. Shares of the company have gained 42.61% year-to-date.
Investors should note that estimates will likely change following yesterday’s earnings report.
