Investing.com -- CVS Health is seeing signs of stabilization in key business areas, prompting Leerink Partners to upgrade the stock from Market Perform to Outperform and raise its price target to $75 per share in a note Thursday. 

“We see the reward as positively skewed on a risk-adjusted basis,” analysts at Leerink Partners wrote, citing improving trends in Aetna and Health Care Benefits (HCB).

The firm noted that CVS shares had rebounded sharply from recent lows, which had been exacerbated by concerns over HCB and pharmacy benefit management (PBM) risks. 

However, with a strategic reboot of Medicare Advantage (MA) and largely unchanged PBM and Health Services Segment (HSS) trajectories, CVS is said to now appear to be nearing the end of its challenges. 

Leerink Partners stated, “There may still be some puts and takes as utilization stays elevated, but that is also now more appropriately aligned with CVS' pricing model and membership growth targets.”

A major positive from the latest quarter was the “absence of decremental Aetna performance”, Leerink Partners noted. 

While HCB remains under pressure, the firm said its medical benefit ratio (MBR) was slightly better than expected, contributing significantly to CVS’s outperformance. 

The analysts highlighted that Aetna is well positioned for multi-year margin recovery in 2025, aided by Medicaid rate improvements, market exits, and benefit design adjustments. Additionally, specialty growth is said to be accelerating, with Cordavis penetration increasing and over 90% of Humira patients now using biosimilars.

Despite the upbeat outlook, Leerink Partners pointed to underperformance in HSS, particularly due to Oak Street headwinds and CNC roll-offs, as well as light operating cash flow guidance for 2025. 

However, the firm sees more sources of upside than downside, stating, “Today's outlook, and color behind it, helps solve that hesitation.”

Following the results, Leerink raised its EPS estimates for FY25 to $5.88 (from $5.77) and FY26 to $7.16 (from $7.10), citing improved profitability in HCB.

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