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Woonsocket, Rhode Island-based CVS Health Corporation (CVS) offers pharmacy benefit management services, mail order, retail and specialty pharmacy, disease management programs, and retail clinics. With a market cap of $73 billion, it operates through Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The healthcare giant is expected to release its Q3 earnings before the market opens on Wednesday, Nov. 6.
Ahead of the event, analysts expect CVS Health to report a profit of $1.70 per share, down 23.1% from $2.21 per share reported in the year-ago quarter. The company has surpassed Wall Street's bottom-line estimates in three of the past four quarters while missing on another occasion. Its adjusted EPS for the last reported quarter declined 17.2% year-over-year to $1.83 but exceeded the consensus estimates by 5.2%.
For fiscal 2024, analysts expect CVS Health to report an adjusted EPS of $6.49, down 25.7% from $8.74 in fiscal 2023. However, in fiscal 2025, its adjusted EPS is expected to grow 11.6% year-over-year to $7.24.
CVS stock has plummeted 26.3% on a YTD basis, significantly underperforming the S&P 500 Index’s ($SPX) 22.7% gains and the Health Care Select Sector SPDR Fund’s (XLV) 11% returns during the same time frame.
Shares of CVS Health dropped 3.2% after the release of its disappointing Q2 earnings on Aug. 7. The company reported a 2.6% year-over-year growth in total revenues, reaching $91.2 billion, falling short of Wall Street’s expectations. This growth was primarily driven by a remarkable 22.1% increase in premium revenues, reaching $30.7 billion, but was offset by a significant 7.1% decline in product sales to $56.2 billion. The surge in operating costs, particularly a 27.9% rise in healthcare expenses, led to a contraction in net margin by 19 basis points to 1.9% and a 6.9% drop in net income to $1.8 billion. Moreover, observing its performance in the first half of 2024, CVS reduced its full-year adjusted EPS and cash flow from operations guidance, making investors jittery.
The consensus opinion on CVS stock is moderately bullish, with an overall “Moderate Buy” rating. Out of the 24 analysts covering the stock, 12 recommend “Strong Buy,” three advise “Moderate Buy,” and nine suggest a “Hold” rating. As of writing, CVS is trading below the mean price target of $70.22.
On the date of publication, Aditya Sarawgi 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.
