Investing.com -- Bernstein upgraded both Cigna Group and CVS Health Corp to Outperform in separate notes on Thursday, arguing that sweeping pharmacy benefit manager (PBM) reforms have removed a major overhang for the sector.

Analyst Lance Wilkes said he is raising his Cigna rating to Outperform and lifting the price target to $358 from $307, noting that “PBM reform … will increase the CI multiple over time.”

He added that the combination of a new PBM transparency bill, an FTC settlement and Cigna’s previously announced PBM model changes enables the re-rating.

Bernstein is boosting its target multiple from 9.5x to 11x, reflecting what Wilkes calls “improved multiples in the Evernorth segment from approx 8.5x to 10.5x.”

Wilkes is comfortable with Cigna’s leadership transition and does not expect a highly dilutive acquisition in the near term. Longer term, he argues the company may need to expand government-managed-care operations or pursue non-insurance service lines.

For CVS, Wilkes also moved the stock to Outperform and raised the price target to $94 from $91, saying the PBM reforms are “reducing the uncertainty overhang” while momentum builds behind the Aetna insurance unit.

He expects Aetna earnings to “nearly double over the next 3 years” as Medicare Advantage margins normalize.

Bernstein forecasts modest EPS growth in 2026 as PBM margin pressure continues but sees a return to steady expansion from 2027–2029, with a projected 9% CAGR.

The firm also nudged its valuation multiple to 12x NTM EPS following the upgrade.