Why CVS Stock Rallied Tuesday Morning

CVS rallied 3.4% to 3.7% Tuesday after Jefferies analyst Brian Tanquilut reiterated a buy rating and $120 price target, implying 28% upside from current levels. Tanquilut spotlighted management's guidance pointing to at least $8.44 in earnings per share by 2027, alongside planned share buybacks and a sharp turnaround at Aetna, which delivered over $2 billion in year-over-year operating income growth.

CVS has now beaten earnings expectations for four straight quarters and recently raised full-year adjusted EPS guidance to $8.00, representing 19% growth. The combination of consistent execution, improved profitability in its insurance segment, and capital return plans appears to be rebuilding investor confidence after a challenging stretch for the health services giant.

The $120 target from Jefferies sits well above current trading levels, suggesting the analyst sees further room for multiple expansion if the company continues hitting its operational milestones and follows through on buybacks.