Proactive Investors - CVS Health Corp (NYSE:CVS) has the unique opportunity as a health plan to leverage its high net promoter score retail franchise, according to BofA Securities analysts.
In an update to clients, the analysts noted they left the company’s investor day incrementally positive and believe CVS has appropriately reset expectations for earnings growth over the intermediate term.
"Overall, CVS has a differentiated brand versus other health plans (given the retail/consumer footprint) which uniquely positions CVS to engage with members across the continuum," the analysts wrote.
They added that unlike its main pharmacy peer, CVS is doubling down on its investment in health delivery and expects revenue to grow to $6 billion plus in 2023, to $10 billion plus in 2024 and to grow mid-double digits through 2028.
Analysts at BofA also view CVS Health’s continued investment in the Oak Street and Signify assets as significantly differentiating itself from both health plan and retail peers, noting the company’s new CostVantage pharmacy reimbursement model could be "disruptive".
They reiterated their Buy rating on CVS stock and $86 per share price objective.
Shares of CVS Health rose 3% to $73.26 in late-afternoon trading on Wednesday but have fallen 21% year to date.