CVS Health Price Target Cut to $90 as Shares Drop 15%, Biosimilars Slash Costs 50%+
Argus cut its CVS Health price target to $90 from $91 but kept a Buy rating after shares fell nearly 15% following a proposed freeze of 2027 Medicare Advantage rates. CVS will swap Amgen and Eli Lilly bone-disease drugs for biosimilars and generics, cutting costs 50%+ and saving $1.5 billion.
1. Argus Adjusts Price Target and Rating
Argus trimmed its price target on CVS Health from $91 to $90 while maintaining a Buy rating after the stock dropped nearly 15%. The cut reflects pressure from a CMS proposal to hold Medicare Advantage reimbursements flat for 2027, though Argus expects the final rates to rise before an April 2026 decision.
2. Proposed Medicare Advantage Rate Freeze
The Centers for Medicare and Medicaid Services has proposed no change in Medicare Advantage reimbursement rates for 2027 versus 2026, reversing last year’s 5.1% hike. A flat rate would weigh on health insurers and PBMs, but CVS’s diversified operations in insurance, pharmacy services and retail may soften margin impacts.
3. Biosimilar Formulary Changes Drive Major Savings
Effective April 1, CVS will replace Amgen’s Prolia and Lilly’s Forteo with biosimilar versions such as Cordavis’s Ospomyv, Celltrion’s Stoboclo and generics like Bonsity and Tymlos. These formulary adjustments are expected to cut prescription costs by over 50% and have already generated $1.5 billion in gross savings.
4. Diversification Provides Cushion
Beyond pharmacy benefit management, CVS Health’s integrated model—including Aetna insurance and retail footprint—offers multiple revenue streams. This diversification position is seen as a buffer against reimbursement pressure and supports long-term stability.