CVS’ share of Medicare Advantage members in plans rated at least 4.5 stars is expected to drop sharply to 35% from 63%, TD Cowen said.

  • TD Cowen estimates 70% of CVS’ Medicare Advantage members will be enrolled in plans rated four stars or higher, down from 82% in 2026.
  • The brokerage expects the weaker ratings to reduce CVS’ adjusted earnings by $0.41 per share in 2028.
  • Humana emerged as a winner after its largest Medicare Advantage contract improved from 3.5 to four stars.

CVS Health (CVS) was in the spotlight on Friday after TD Cowen flagged fresh challenges for its Medicare Advantage business, as weaker 2027 Star Ratings could reduce future government bonus payments and weigh on earnings.

CVS shares were down 1.8% at the time of writing but are tracking their best week in over a month.

TD Cowen Sees Bottomline Pressure For CVS

On Thursday, the Centers for Medicare & Medicaid Services (CMS) released its 2027 Medicare Advantage Star Ratings, which measure the quality of health insurance plans and determine their eligibility for additional government bonus payments.

Plans earning at least four stars qualify for additional government payments, making these ratings important to insurers’ profitability.

TD Cowen estimates that 70% of CVS’ Medicare Advantage members will be enrolled in plans rated four stars or higher, down from 82% in 2026. The share in plans rated at least 4.5 stars is expected to fall to 35% from 63%.

The brokerage expects the weaker ratings to reduce CVS’ adjusted earnings by $0.41 per share in 2028 and slow adjusted EPS growth by about 5%. However, the brokerage said CVS could soften the financial impact by adjusting the benefits offered under its Medicare Advantage plans.

The company recently raised its full-year 2026 adjusted EPS guidance to $7.90 - $8.10.

The stock has a 12-month consensus price target of $115.76, representing a 34% upside from current levels, while 25 of the 27 analysts covering the stock either have a ‘Buy’ or a ‘Strong Buy’ rating and two have a ‘Hold’ rating, according to Koyfin.  

Humana Emerges As A Winner

Rival Humana (HUM) benefited after its largest Medicare Advantage contract, covering over two million members, improved from 3.5 to four stars, restoring eligibility for bonus payments.

HUM shares surged 15% in pre-market trading on Friday.

Retail Says CVS Is ‘Way Oversold’

Retail sentiment surrounding CVS trended in the ‘Bullish’ zone on Stocktwits over the past 24 hours, amid ‘high’ message volumes.

One user said CVS is ‘way oversold’ and expects the stock to rally to $95 next week.

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CVS stock is up around 10% so far this year but is significantly short of HUM’s near 47% surge.

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