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CVS Health Corporation (NYSE: CVS), the world’s largest retail pharmacy chain, has a mission to provide quality healthcare to everyone. A few months ago, the company acquired health risk assessment company Signify Health in a multi-billion dollar deal, continuing its initiative to expand its portfolio.
Although CVS stock remains on a growth path after the initial decline that followed the COVID-19 outbreak about three years ago, it fluctuated last year and fell in the early weeks of 2023. With the stock trading below its long-term average today. , the price seems fair enough to take the plunge. According to bullish forecasts of experts, the stock is likely to move into high growth mode and set new records before the end of the year.
Buy It?
The company has a decent dividend yield of 2.8%, after continuing its dividend hike last year. Its continued focus on improving health care outcomes and reducing costs for customers gives it a better business, compared to rival pharmacy chain Walgreens Boots Alliance, Inc. (NASDAQ: WBA).
CVS Health Corporation Q3 2022 Earnings Call Transcript
Over the years, CVS has expanded into new areas, diversifying its businesses — venturing into health insurance with the acquisition of Aetna and CVS Caremark’s pharmacy benefit management division. These efforts have helped the company maintain its leadership position and remain unaffected by market challenges, to a large extent.
Finance
All three operating segments performed well in the most recent quarter, led by the pharmaceutical services segment which includes the pharmaceutical benefit management unit. With same-store sales growth of nearly 10%, net profit doubled to $81.2 billion in the third quarter of 2022. That translated to 6% growth in earnings per share to $2.09, on an adjusted basis. CVS executives are of the opinion that full-year earnings will be higher than last year’s levels.
From CVS Health’s Q3 2022 earnings call:
“Our digital-led omnichannel healthcare approach prioritizes the most important experience for consumers. This includes developing digital tools for a seamless and convenient experience, which leads to higher engagement and satisfaction. For example, we recently launched new functions that enable more choice and convenience for patients filling prescriptions Patients can speed up important prescriptions to see their out-of-pocket costs and track order status, all before they come to our pharmacy.
Q4 Report on Touch
While maintaining solid profits over the past several years, the company has achieved something that no one else has been able to do – delivering stronger-than-expected earnings in every quarter since 2016. In a sign that growth is slowing in the final months of fiscal 2022, market watchers expect profits to remain flat in the fourth quarter. They also saw a 3% decline in Q4 adjusted earnings per share to $1.92. The report is scheduled to be released on February 8, in the morning.
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After a slow start to the year, CVS gathered momentum last week. However, the stock traded lower on Monday. It has lost about 9% in the past six months.
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