close
close

We believe that after dropping more than 12% YtD at current levels CVS Health (NYSE: CVS) may see higher levels. CVS shares have fallen from $104 in early January to $91 now. The -12% YTD return for CVS marks an outperforming -22% YTD return for the broader S&P500.

In the long term, CVS stock is up 39% from its end-2018 level. UnitedHealth Foundation as well as Target stock both have doubled and the S&P 500 is up 51% over the same period. However, the performance of CVS shares was better than that of its closest peer. Walgreens shares – which is 41% less than in the same period. Our panel is Why CVS Health Stock moved – provides more details on the factors behind this move over the past three years.

This 39 percent increase in CVS shares over the past three years was mainly due to: one. CVS Health Incomewhich is currently up 54% to $300 billion, up from $195 billion in 2018. This was partly offset 2. the company’s P/S ratio, which declined slightly but remained around 0.4x, and 3. the number of shares outstanding increased by 26% to 1.3 billion from 1.0 million in 2018. This means that the company’s earnings per share rose 22% to $228 from $187.

Revenue growth in the recent past has been driven by very strong demand for Covid-19 testing and vaccine administration. Also, Etna
AET
The acquisition bolstered CVS sales in 2019. Even during the pandemic, CVS has seen steady growth across all of its businesses: pharmacy services, retail pharmacy, and medical benefits. The company’s medical benefits segment saw revenue growth of 18% between 2019 and 2021, driven by an increase in total medical members, which currently stands at 24.5 million compared to 22.9 million in 2019. This trend is expected to continue over the next year. coming years, given the aging of the US population.

Now that the worst effects of the pandemic are likely behind us, the economy is recovering and with 67% of the US population fully vaccinated, demand for Covid-19 testing as well as vaccine administration is expected to decline. , which will be reflected in overall CVS revenue growth over the next few quarters. However, the company’s other businesses, including pharmacy services and medical benefits, are expected to grow steadily.

CVS shares are facing headwinds due to ongoing weakness in broader markets. The S&P 500 has now entered bear market territory with growing concerns about an economic slowdown given high inflation, Fed action and supply chain disruptions. However, we appreciate CVS Health Assessment will be $116 per share, reflecting upside potential of 27% from the current market price of $91, meaning investors are better off using the recent drop to invest in CVS stock for long-term profit. Our valuation is based on a forward P/E ratio of just under 14x, based on our earnings forecast of $8.40 per share, adjusted for full-year 2022. This compares to more than 12 times the value seen at the end of 2021.

While CVS shares are likely to see higher levels, it’s good to see how Colleagues of CVS Health fares on the metrics that matter. You will find other valuable comparisons for companies from different industries at Comparison with peers.

In addition, the Covid-19 crisis has created many price gaps that could offer attractive trading opportunities. For example, you’d be surprised how illogical stock valuations are. Targeted and emergent biosolutions.

Stock prices have fallen sharply across all sectors in recent months and we are now in a bear market for the first time since March 2020 when the Covid-19 outbreak triggered a market crash. We capture key Dow trends during and after major market crashes with our interactive dashboard analysis.Comparison of market crashes.’

What if instead you are looking for a more balanced portfolio? Our quality portfolio as well as multi-strategy portfolio have consistently outperformed the market since the end of 2016.

Invest with trefis Portfolios outperforming the market

see all trefis Price estimates

By them

Leave a Reply

Your email address will not be published.