Bernstein raises ratings for CVS Health and Cigna, citing PBM reform as a key clearing event

LootboxPhobia · 2026-03-12T23:43:34+00:00

Bernstein upgraded Cigna and CVS Health to outperform, citing pharmacy benefit management reforms that reduce uncertainty. Cigna's price target was raised to $358, while CVS was raised to $94, with expectations for significant earnings growth at both companies in the future.

LootboxPhobia

2026-03-12 23:43:34

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Investing.com - Bernstein upgraded the ratings of Cigna Group and CVS Health Corp to Outperform on Thursday in an independent research report, believing that comprehensive pharmacy benefit management (PBM) reforms have eliminated major uncertainties in the sector.

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Analyst Lance Wilkes said he raised Cigna’s rating to Outperform and increased the target price from $307 to $358, noting that “PBM reforms… will, over time, boost Cigna’s valuation multiples.”

He added that the new PBM transparency legislation, the Federal Trade Commission (FTC) settlement agreement, and Cigna’s previously announced PBM model changes make re-rating possible.

Bernstein raised its target valuation multiple from 9.5x to 11x, reflecting what Wilkes called the “Evernorth business segment valuation multiple increasing from about 8.5x to 10.5x.”

Wilkes feels confident about Cigna’s leadership transition and expects the company not to undertake highly dilutive acquisitions in the short term. In the long run, he believes the company may need to expand its government-managed healthcare business or develop non-insurance service lines.

For CVS Health, Wilkes also upgraded the stock to Outperform and raised the target price from $91 to $94, stating that PBM reforms are “reducing uncertainty pressure,” while growth in the Aetna insurance division is strengthening.

He expects that as Medicare Advantage profit margins normalize, Aetna’s earnings will “nearly double over the next three years.”

Bernstein forecasts that due to ongoing pressure on PBM profit margins, EPS in 2026 will grow modestly, but from 2027 to 2029, it will recover to stable expansion, with a compound annual growth rate of 9%.

After upgrading the rating, the company also slightly adjusted its valuation multiple to 12 times the expected earnings per share over the next 12 months.

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