CVS Health's (CVS) 2025 appears "less certain" now that the healthcare company has withdrawn its 2024 guidance and announced changes in leadership, RBC Capital Markets said in a note Friday.
The investment firm said it was lowering its Q4 earnings estimate to $0.75 from $1.66 previously to reflect the company's Q3 results and "persistent utilization headwinds." The Q4 forecast is based on an elevated medical loss ratio, or MLR, estimate of 95.7%, up from 92.1% previously, RBC said.
RBC slashed its 2025 earnings outlook to $5.71 from $7.33 based on a MLR estimate of 92.2%, up from 89.7% earlier.
"With premium deficiency reserves recorded in the quarter, utilization is higher than previously expected, prompting investor concerns around 2025 pricing and utilization," RBC said in its note.
The firm reiterated an outperform rating on the stock and cut its price target to $58 from $68.
Price: 52.97, Change: -2.13, Percent Change: -3.86
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