CVS Health Prepares for Q3 Earnings Report Amid Declining Stock Performance
Analysts Predict Profit Drop as Company Faces Challenges
Woonsocket, Rhode Island-based CVS Health Corporation (CVS) provides a variety of healthcare services, including pharmacy benefits management, mail order, retail and specialty pharmacy, disease management programs, and retail clinics. With a market capitalization of $73 billion, CVS operates through several segments: Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. The company is set to announce its third-quarter earnings on Wednesday, November 6, before the market opens.
Anticipated Earnings Performance and Historical Context
Analysts predict CVS Health will report earnings of $1.70 per share, a decline of 23.1% compared to $2.21 per share from the same quarter last year. Over the last four quarters, CVS has exceeded Wall Street’s profit expectations in three instances but fell short on another. The adjusted earnings per share (EPS) for the most recent quarter dropped 17.2% year-over-year, landing at $1.83, yet still surpassing consensus estimates by 5.2%.
Future Projections and Market Sentiment
For fiscal 2024, CVS Health’s adjusted EPS is expected to be $6.49, marking a 25.7% decline from $8.74 in fiscal 2023. However, forecasts indicate a rebound in fiscal 2025, with adjusted EPS anticipated to rise 11.6% to $7.24.
Stock Performance and Analyst Ratings
CVS stock has tumbled 26.3% year-to-date, significantly lagging behind the S&P 500 Index’s gains of 22.7% and the Health Care Select Sector SPDR Fund’s increase of 11% during the same period. Following the release of disappointing Q2 earnings on August 7, shares dropped 3.2%. CVS reported a 2.6% increase in total revenues, reaching $91.2 billion, which, however, did not meet Wall Street expectations. This revenue growth was led by a notable 22.1% rise in premium revenues to $30.7 billion, but it was counteracted by a significant 7.1% decline in product sales, totaling $56.2 billion. The company’s rising operating costs, particularly a 27.9% increase in healthcare expenses, resulted in a net margin contraction of 19 basis points to 1.9% and a 6.9% decline in net income, which fell to $1.8 billion. Concerns arose among investors after CVS adjusted its full-year EPS and cash flow from operations guidance for 2024 downward.
Analyst Ratings Reflect Cautious Optimism
The overall consensus on CVS stock is moderately bullish, reflecting a “Moderate Buy” rating. Among the 24 analysts covering the stock, 12 recommend a “Strong Buy,” three suggest a “Moderate Buy,” and nine propose a “Hold” rating. Currently, CVS shares are trading below the average price target of $70.22.
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On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
