/CVS%20Health%20Corp%20corporate%20office-by%20JHVEPhoto%20via%20iStock.jpg)
CVS Health Corporation (CVS), with a market cap of $75.4 billion and based in Woonsocket, Rhode Island, is a prominent pharmacy innovation company offering services such as pharmacy benefit management, mail order, retail and specialty pharmacy, disease management, and retail clinics. It serves various clients, including employers, insurance companies, and individuals under various brand names.
Shares of the healthcare plan provider have lagged behind the broader market in the last year. While CVS has declined 18.8% over this time frame, the broader S&P 500 Index ($SPX) has rallied by 19%. In 2024, the stock dropped 24%, compared to SPX’s 14.2% return on a YTD basis.
Narrowing the focus, CVS has also underperformed the iShares U.S. Healthcare Providers ETF (IHF), which has gained 7.6% over the past year.
Shares of CVS have underperformed this year due to macroeconomic challenges. The company also faces significant financial issues, especially with its Medicare Advantage (MA) business, where higher-than-expected medical care utilization rates have increased costs and reduced operating profits. This ongoing problem, persisting for nearly two years, has led to multiple guidance reductions, negatively affecting market sentiment.
In addition, on May 1, CVS experienced a sharp decline in its stock price, plummeting over 16%. This drop followed the release of its Q1 earnings report, which missed the market’s expectations. CVS also lowered its full-year adjusted EPS forecast from the previous guidance.
For the current fiscal year, ending in December, analysts expect CVS’s EPS to decline 19.9% year over year to $7. Moreover, the company’s earnings surprise history is mixed. It exceeded the consensus estimate in three of the last four quarters while missing on one occasion.
CVS Health stock has a consensus “Moderate Buy” rating. Out of 24 analysts covering the stock, 10 recommend a "Strong Buy," three suggest a "Moderate Buy," and 11 advise a "Hold."
The consensus rating has been stable over the past months.
On July 22, Sarah James from Cantor Fitzgerald maintained a “Hold” rating on CVS Health with a price target of $58.
The mean price target of $69.91 suggests a 16.5% premium to CVS from current levels. Furthermore, the Street-high target of $94 represents an upside potential of 56.6%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
