CVS Health upgraded to TD Cowen after insurer unveils Medicare Advantage 2025 plan By Investing.com

Investing.com — Analysts at TD Cowen upgraded CVS Health (NYSE: ) to a “Buy” rating from a “Hold” rating, citing changes to Medicare Advantage 2025 plan benefits announced earlier this week.

Along with peers like Humana (NYSE: ) and Cigna (NYSE: ) , CVS unveiled details of its government-backed health insurance plans for next year for people age 65 and older on Tuesday, ahead of the start of enrollment for Medicare Advantage benefits later. this month.

The U.S. government pays private insurers like CVS a set rate to manage so-called Medicare Advantage plans, which offer seniors additional benefits not typically included in regular government coverage.

According to the Centers for Medicare and Medicaid Services (CMS), Medicare Advantage plan enrollment is projected to expand to 35.7 million people in 2025.

In a note to clients, TD Cowen analysts said CVS’s latest Medicare Advantage plan included “significant” reductions in benefits for over-the-counter drug purchases and lower allowances for dental coverage.

CVS is also likely to see an increase in the number of people who have signed up for its highly rated 4-star plans to 90% next year, from 73% in 2024. Star ratings are a measure of health performance and prescription drug plans, which are conducted by CMS.

“This gives us greater confidence that 2024 represents a ceiling for the stock, as well as great confidence in CVS’s ability to see (double-digit) adjusted (earnings per share) growth in (2025) (…) and further. ,” TD Cowen analysts wrote.

Shares of Rhode Island-based CVS Health were slightly higher in premarket trading in the US on Friday. They have fallen more than 22% so far this year, echoing recent investor concerns about its performance.

Previous media reports have suggested that CVS is looking at several options to overhaul the business, including a breakup of its retail and insurance divisions.

On Tuesday, the company announced it would lay off about 2,900 workers, or just under 1 percent of its workforce, as part of cost-cutting efforts. Most of the affected roles would be in its corporate operations and not in its ubiquitous stores and pharmacies, CVS said.