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On Wednesday, Cantor Fitzgerald analysts reaffirmed their Overweight rating for CVS Health stock (NYSE: CVS) and maintained their price target at $71.00. With a market capitalization of $80.4 billion and an attractive 4.2% dividend yield, CVS appears undervalued according to InvestingPro analysis. The analysts noted discrepancies in enrollment data, particularly highlighting that CVS Health’s enrollment figures appear understated when adjusted for recent contract wins.
The analysts observed that enrollment files, which currently contain about 50% of April data, show a slight decrease in enrollment across six payors, including Medicaid. In contrast, consensus estimates for UnitedHealth Group (NYSE: NYSE:UNH) and Humana (NYSE: HUM) from FactSet indicate expected enrollment growth, with UnitedHealth showing the most significant increase.
The report pointed out that while CVS Health’s consensus projects growth, the figures may not fully account for the 77,000 lives gained through a Pennsylvania contract that began on January 1, 2025. This adjustment suggests that the consensus estimates for CVS Health could be conservative.
Additionally, the analysts mentioned that there are no new contracts expected to start in the second quarter of 2025. This context might influence the enrollment projections for CVS Health in the coming months.
The reaffirmation of the Overweight rating reflects Cantor Fitzgerald’s continued confidence in CVS Health’s market position and potential for growth, despite the current enrollment data discrepancies. The company’s strong free cash flow yield and 55-year history of maintaining dividend payments further reinforce its market stability.
In other recent news, CVS Health Corp (NYSE:CVS). has submitted a proposal to acquire numerous Rite Aid Corp (NYSE:US90274J5618=UBSS). stores and patient data in the Pacific Northwest as Rite Aid ceases operations following its second bankruptcy declaration. This move could expand CVS’s presence in a region where it currently has fewer stores. Meanwhile, JPMorgan has raised its price target for CVS Health to $86, maintaining an Overweight rating, citing better-than-expected first-quarter earnings and potential improvements in healthcare benefits by 2025. Additionally, Cantor Fitzgerald reaffirmed an Overweight rating on CVS, with a price target of $71, expressing confidence in CVS’s strategic direction and cost-trend assumptions.
CVS has also partnered with Novo Nordisk (NYSE:NVO) to make Wegovy, a weight-loss drug, its preferred option for members starting July 2025. This partnership aims to provide affordable access to the medication as part of CVS’s Weight Management program. Analysts from BMO Capital noted that this strategic move by Novo Nordisk could help regain market share amidst competition. On the Medicare Advantage front, KeyBanc has maintained a Sector Weight stance on Humana Inc (NYSE:HUM). and Alignment Healthcare, while keeping an Overweight position on UnitedHealth Group, despite expanded audits by the Centers for Medicare & Medicaid Services.
These audits, announced by CMS, will see a significant increase in the number of Medicare Advantage plans reviewed, potentially recovering substantial funds annually. The audits have raised concerns among investors about funding pressures and regulatory changes. Despite challenges, KeyBanc suggests that issues affecting the sector may be resolved by 2026, although clarity on earnings recovery is not expected until late 2025.
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