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Investing.com - Cantor Fitzgerald has reiterated its Overweight rating on CVS Health (NYSE:CVS), a $97 billion healthcare giant that has seen its stock surge nearly 77% year-to-date, with a price target of $78.00, according to a research note released Friday. According to InvestingPro, analysts maintain a bullish consensus on the stock, with price targets ranging from $70 to $103.
The firm noted that CVS Health’s slight decline in Medicare Advantage Star ratings was "more positive than feared" and represented "the largest upside in ratings" in their view. Cantor Fitzgerald anticipates a positive market response to CVS maintaining over 80% of its ratings at high levels. The company’s strong operational performance is reflected in its GOOD Financial Health score from InvestingPro.
The research highlighted that intra-quarter concerns had emerged regarding CVS Health’s ability to maintain its leading position in the Medicare Star Ratings program, which affects reimbursement rates and enrollment periods for Medicare Advantage plans.
Key contracts mentioned in the analysis include H5522, a 1.3 million member contract representing 31% of CVS Health’s Medicare Advantage membership, and H5521, a 1.1 million member contract accounting for 26% of membership, both of which achieved 4.5-Star Ratings.
The Star Ratings are significant for CVS Health as they directly impact the company’s Medicare Advantage business, which represents a substantial portion of its healthcare benefits segment. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, one of 1,400+ detailed company analyses available to subscribers.
In other recent news, CVS Health’s subsidiary, Omnicare, has filed for Chapter 11 bankruptcy protection following a significant $949 million judgment over allegations of improper prescription drug dispensing to long-term care patients. The bankruptcy filing lists Omnicare’s assets at a minimum of $100 million, with liabilities ranging from $1 billion to $10 billion, as the company seeks to address financial challenges and litigation issues. Additionally, CVS Health has been affected by trends in the Arizona market, where Medicaid disenrollment is impacting several healthcare insurers. Cantor Fitzgerald has maintained an Overweight rating on CVS Health, setting a price target of $78.00, despite these challenges. In related developments, Amazon has announced plans to expand its pharmacy services, which could further influence CVS Health’s market position. The expansion involves Amazon’s pharmacy division beginning to fill prescriptions at kiosks in its One Medical facilities starting in December. Meanwhile, Cantor Fitzgerald reiterated a Neutral rating for Molina Healthcare, another company affected by the Arizona Medicaid trends. These developments highlight ongoing shifts and challenges in the healthcare and pharmacy sectors.
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