Deutsche Bank upgrades CVS with recovery on sight

December 03, 2024 08:03 PM IST | By Investing
 Deutsche Bank upgrades CVS with recovery on sight

Investing.com -- Deutsche Bank upgraded CVS Health Corp's (NYSE:CVS) stock to “buy” from “hold” on Tuesday, saying the company’s earnings and valuation are likely at trough levels as it implements measures to improve profitability.

The analysts highlighted a potential turnaround in CVS's managed care organization (MCO) segment, which includes its health insurance business. They noted that earnings from the segment could outperform Wall Street expectations as early as 2025. Describing CVS as a "show me" story, where where investors will need to see success in the MCO segment to regain confidence.

DB also pointed to key leadership changes as a catalyst for recovery. CVS recently appointed David Joyner as CEO and hired Steve Nelson, a former UnitedHealth Group (NYSE:UNH) executive, to lead its managed care business. Additionally, under an agreement with activist investor Glenview Capital, CVS added four new board members.

We believe the new leadership, combined with the increased Board oversight, represents the set of fresh eyes needed at CVS to point the company in the right direction,” the analysts said in a note

The firm maintained its price target of $66 but said the stock, which currently trades at 9.4 times its revised 2025 earnings estimate, could see its valuation expand to 10-11 times as earnings growth accelerates. Deutsche Bank (ETR:DBKGn) expects CVS shares to reach $76-$80 within a year, representing a 30% upside, and $90-$94 over 24 months, based on 2027 earnings estimates.

Potential risks includes healthcare regulatory changes, potential drug pricing reforms, and pressures on retail pharmacy reimbursements.

This article first appeared in Investing.com


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Limited, Company No. 12643132 (“Kalkine Media, we or us”) and is available for personal and non-commercial use only. Kalkine Media is an appointed representative of Kalkine Limited, who is authorized and regulated by the FCA (FRN: 579414). The non-personalized advice given by Kalkine Media through its Content does not in any way endorse or recommend individuals, investment products or services suitable for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a qualified financial planner and/or adviser. No liability is accepted by Kalkine Media or Kalkine Limited and/or any of its employees/officers, for any investment loss, or any other loss or detriment experienced by you for any investment decision, whether consequent to, or in any way related to this Content, the provision of which is a regulated activity. Kalkine Media does not intend to exclude any liability which is not permitted to be excluded under applicable law or regulation. Some of the Content on this website may be sponsored/non-sponsored, as applicable. However, on the date of publication of any such Content, none of the employees and/or associates of Kalkine Media hold positions in any of the stocks covered by Kalkine Media through its Content. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content. Some of the images/music/video that may be used in the Content are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music or video used in the Content unless stated otherwise. The images/music/video that may be used in the Content are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated or was found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.

Sponsored Articles


We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.