Piper Sandler reiterated an overweight rating on CVS Health Corp. on Wednesday, citing strong second-quarter 2026 results and upwardly revised guidance, while flagging potential headwinds from the 340B drug pricing program.
The brokerage maintained a price target of $113 per share, up from its previous level. The stock last traded at $94.14, roughly in line with Piper Sandler’s target and above the $93.89-to-$94.32 range observed in recent trading sessions.
CVS reported adjusted earnings of $2.58 per share for the quarter, surpassing Wall Street expectations of $1.83 per share. Revenue reached $106.1 billion, exceeding projections of $100.03 billion. The company also raised its full-year 2026 outlook and set an early floor for adjusted earnings per share in 2027, aligning with consensus estimates.
Analyst Jessica Tassan noted that CVS delivered "exceptional" second-quarter results and raised its 2026 projections, but emphasized that market attention had focused on the 340B program. Piper Sandler’s analysis quantified the program’s potential impact on CVS’s pharmacy and consumer wellness segment, estimating a $115.8 million reduction in adjusted operating profit for calendar year 2025. The health services segment was projected to see a $689.6 million decline in adjusted operating profit due to the program, resulting in a consolidated adjusted operating profit impact of $805.3 million.
The 340B program, which requires drug manufacturers to provide discounted prices to eligible healthcare providers, has faced regulatory and policy scrutiny, including investigations by the Senate HELP Committee and actions by the Health Resources and Services Administration (HRSA). CVS’s exposure stems from Medicaid fiscal policy changes, list price reductions, and manufacturer restrictions on contract pharmacies, according to Piper Sandler’s assessment, which drew on HRSA reports, court filings, company transcripts, and SEC disclosures.
Separately, Moody’s upgraded CVS Health’s outlook to positive from stable, citing progress in stabilizing its health insurance business, including reduced financial leverage and adjusted pricing strategies. UBS maintained a price target of $126, while InvestingPro’s fair-value estimate stood at $124.33.
CVS’s stock has gained 1.53% in recent trading, reflecting investor optimism following the earnings beat, though Piper Sandler’s analysis underscores lingering risks tied to the 340B program.
