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On Wednesday, JPMorgan analyst Lisa Gill adjusted the price target for CVS Health (NYSE:CVS), increasing it to $86.00 from the previous $81.00, while maintaining an Overweight rating on the stock. Currently trading at $66.79, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $70 to $95. The revision follows CVS Health’s first-quarter earnings report last week, which Gill found to be better than expected. The analyst cited several factors that could support improvement in the company’s performance by 2025, including its approach to healthcare benefits (HCB) that may provide a buffer to results.
Gill’s optimism is partly based on the performance of CVS Health’s Patient Care Work (PCW) and Health Services Segment (HSS), which exceeded expectations. The company’s strong momentum is reflected in its impressive 50.95% year-to-date return. Management’s commitment to providing credible guidance, with the potential for outperformance, was also highlighted as a positive indicator. InvestingPro subscribers can access 8 additional key insights about CVS’s performance and outlook. The revised December 2025 price target is underpinned by an increased 2025 adjusted earnings per share (EPS) estimate of $6.04, mainly due to improved HCB estimates.
Despite the early stage of the fiscal year, Gill has chosen to remain conservative, aligning with the lower end of management’s HCB guidance of approximately $1.93 billion with a 91.3% medical loss ratio (MLR). The $86 price target is based on applying a 12.5 times price-to-earnings (P/E) multiple to the 2026 adjusted EPS estimate.
In her comments, Gill conveyed a cautious yet positive outlook, emphasizing that CVS Health’s improvement in HCB and the growth of long-term healthcare services could contribute to the company’s success in the upcoming years. With a solid financial health score rated as "GOOD" by InvestingPro and a P/E ratio of 15.98x, the analysis suggests that CVS Health may have upside potential, supported by strategic initiatives and market performance. Discover comprehensive insights about CVS and 1,400+ other stocks through InvestingPro’s detailed research reports.
In other recent news, CVS Health reported strong financial results for the first quarter of 2025, surpassing expectations with earnings per share (EPS) of $2.25 compared to the forecast of $1.64. The company’s revenue reached nearly $95 billion, marking a 7% year-over-year increase. Following these results, CVS Health has raised its full-year 2025 EPS guidance to a range of $6.00-$6.20. In strategic developments, CVS Health has partnered with Novo Nordisk (NYSE:NVO) to make Wegovy, a GLP-1 drug for obesity, the preferred medication for its Caremark members starting July 2025. This partnership aims to provide the drug at a more affordable price, potentially affecting around 35 million lives. Analyst Sarah James from Cantor Fitzgerald maintained an Overweight rating on CVS Health, expressing confidence in the company’s strategic direction and financial health. Additionally, CVS Health plans to exit the individual health insurance exchange market by 2026, projecting losses of $350-$400 million for 2025. These moves reflect CVS Health’s ongoing efforts to adapt and strengthen its position in the healthcare market.
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