CVS Health (CVS) Q1 earnings will beat estimates largely due to favorable medical loss ratio dynamics tied to the Inflation Reduction Act and Medicare Part D and a strong flu season, UBS Securities said in an earnings preview emailed on Tuesday.
The company's stock may not respond significantly unless there is greater clarity on Medical Advantage cost trends and membership mix, according to the preview.
The firm said that retail pharmacy might be protected due to dynamic maximum allowable cost pricing.
UBS said that the company faces regulatory risk if new legislation in Alaska that bans pharmacy benefit managers from owning pharmacies is adopted by other states.
The firm has a neutral rating on CVS stock with a $67 price target.
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