TD Cowen reiterated a Buy rating and $110 price target on CVS Health, implying roughly 20% upside from the stock's current $91.41 trading level. The firm analyzed a potential spinoff of CVS's retail pharmacy business following an unsubstantiated news report about the separation.
Analyst Charles Rhyee's sum-of-the-parts model suggests the pharmacy and consumer wellness segment could generate approximately $71 billion in proceeds if sold at 9 times the firm's 2027 adjusted EBITDA estimate. The pharmacy segment has adopted a cost-plus reimbursement model called CostVantage and returned to growth.
TD Cowen noted the segment should benefit from direct-to-consumer pharmacy opportunities, including GLP-1 medications. A spinoff could address state-level regulatory pressures stemming from CVS's ownership of a health plan, pharmacy benefit manager, and pharmacy business combined.
The firm expects CVS to beat adjusted earnings per share in the third quarter, driven by strength in health care benefits and upside from the pharmacy segment's GLP-1 bridge program and MinuteClinic. TD Cowen expects management to provide details on the company's 2027 adjusted earnings per share framework of "at least" $8.44 and discuss 340B drug pricing and Medicare Advantage expectations.
Raymond James maintains an Outperform rating with a $120 price target. Mizuho reiterated an Outperform rating and $120 price target. BofA Securities reiterated a Buy rating with a $110 price target. Cantor Fitzgerald maintained an Overweight rating with a $110 price target. The Financial Times and Wall Street Journal reported the potential separation might be announced soon, with a possible timeline extending to the first half of 2028.
CVS Health stock, currently trading at $91.41, faces analyst scrutiny around its pharmacy spinoff plans, regulatory challenges, and GLP-1 medication opportunities. Investors should monitor third-quarter earnings results and management commentary on the 2027 earnings framework and Medicare Advantage trends.