Shares of CVS Health Corp
The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.
Piper Sandler On CVS Health
Analyst Jessica Tassan maintained an Overweight rating and price target of $72.
CVS Health preannounced a significant MLR (medical loss ratio) and earnings miss for the third quarter and withdrew its full-year guidance, Tassan said in a note. "During 3Q24, CVS recorded $1.1B of premium deficiency reserves primarily related to the Medicare and Individual Exchange businesses within HCB (health care benefits)," she wrote.
While rates, risk adjustment and the IRA are exerting pressure on Medicare Advantage, CVS Health has some "self-induced" issues in the Healthcare Benefits (HCB) segment, which should begin to resolve in 2025, the analyst stated. David Joyner has taken over CEO, effective immediately, and could deliver a "multi-year earnings recovery," she added.
Truist Securities On CVS Health
Analyst David MacDonald reiterated a Buy rating and price target of $76.
CVS Health preannounced its third-quarter adjusted earnings at $1.05-$1.10 per share, significantly below consensus of $1.69 per share, MacDonald said. The results include a charge of around $1.1 billion to record premium deficiency reserves primarily related to the Medicare and Individual Exchange books, which translates to an adjusted earnings headwind of 63 cents per share, he added.
Management no longer believes its prior guidance for 2024 is appropriate, "given continued elevated utilization pressure," the analyst stated. CEO Karen Lynch stepped down and was replaced by industry veteran Joyner, who brings "a wealth of experience in pharmacy services," he further wrote.
CVS Price Action: Shares of CVS Health were down 1.17% to $58.98 at the time of publication on Monday.
