Shares of CVS Health Corp (NYSE: CVS) were trading higher on Tuesday, after attracting short interest earlier in the month.
Several factors are "swinging in a positive direction," including improvements in operational issues and higher confidence in management's outlook, according to Evercore.
The CVS Health Analyst: Elizabeth Anderson upgraded the rating for CVS Health to Outperform, while establishing a price target of $83.
The CVS Health Thesis: The company could regain a 4-star rating in its main Medicare Advantage plan, which would boost confidence in its operations, Anderson said in the upgrade note.
Half of the bonus payments of around $800 million to $1 billion could return by 2025, with "potential for additional upside pending final reinvestment plans," the analyst stated.
"Currently elevated utilization trends appear to be continuing, but we see the '24 guide as conservative enough with the $8.50-8.70 guidance incorporating ~$200-300 MM worse utilization yoy (vs. '23)," Anderson wrote. "Also, CVS's 2024 MA offering is now more competitive and we see mgmt's target of 7-8% (market) growth as achievable," she added.
CVS Price Action: Shares of CVS Health had risen by 0.62% to $71.22 at the time of publication Tuesday.