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CVS Health Corporation (CVS), headquartered in Woonsocket, Rhode Island, provides health solutions across the U.S. Valued at $75.60 billion by market cap, the company owns the country’s largest pharmacy chain with more than 9,000 stores. It offers pharmacy benefit management services, health insurance products and related services, mail-order, retail and specialty pharmacies, disease management programs, and retail clinics.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and CVS fits right into that category, signifying its substantial size, stability, and dominance in its industry. The company comprises over 300,000 employees, including more than 40,000 physicians, pharmacists, nurses, and nurse practitioners.
The healthcare giant has fallen 27.7% from its 52-week high of $83.25, which it hit on Jan. 8. Shares of CVS are down 21.2% over the past three months, underperforming the Dow Jones Industrials Average’s ($DOWI) marginal losses over the same time frame.
Longer term, CVS is down 9.7% over the past year and 23.7% in 2024. By contrast, DOWI is up 2.4% on a YTD basis and 13.6% over the past 52 weeks.
To confirm the recent bearish price trend, CVS has been trading below its 50-day and 200-day moving averages since early April.
On May 1, CVS shares fell more than 19% after the company reported Q1 adjusted EPS of $1.31, below the consensus estimate of $1.69. CVS cut the full-year adjusted EPS forecast to $7 from the prior guidance of $8.30.
CVS’ overall underperformance can be attributed to the rising costs of care in its Medicare Advantage business. Management blamed the rising use of outpatient care, such as hip and knee surgeries, and supplemental benefits, such as dental and vision coverage, for the rising costs. CFO Thomas Cowhey has said that the company believes that these higher costs will persist this year.
Rival Walgreens Boots Alliance, Inc. (WBA) has underperformed CVS. WBA stock has declined 50.7% in the past 52 weeks and 40.4% on a YTD basis.
Despite its recent underperformance compared to DOWI, analysts are optimistic about CVS’ prospects. The stock has a consensus rating of “Moderate Buy” from the 24 analysts covering it, and the mean price target of $70.52 is a 17.1% premium to current levels.
On the date of publication, Dipanjan Banchur 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.
