CVS shares rebound on Wednesday, third-quarter profit exceeds estimates supported by pharmacy services and health care benefits businesses

November 7, 2019 10:26 am

CVS Health Corp’s (CVS) third-quarter earnings, reported on Wednesday, topped Wall Street estimates, supported by strength in its pharmacy benefit management and Aetna health insurance businesses. CVS Health also revised up its full-year forecast for adjusted earnings.

CVS shares closed higher for the seventh time in the past ten trading sessions in New York on Wednesday. The stock went up 5.36% ($3.61) to $70.93. The latter also was the intraday high and a price level not seen since December 18th 2018 ($71.41).

Shares of CVS Health Corp have risen 8.26% so far in 2019 compared with a 22.73% gain for the benchmark index, S&P 500 (SPX).

In 2018, CVS Health’s stock went down 9.63%, thus, it again underperformed the S&P 500, which registered a 6.24% loss.

The drug store operator said its total revenue had surged 36.5% year-on-year to $64.81 billion during the third quarter.

Revenue at CVS Health’s pharmacy benefit management division went up 6.4% year-on-year to $36.02 billion during the latest quarter, as prices of branded drugs rose.

Revenue at the company’s health care benefits business, which houses Aetna, went up to $17.18 billion during the quarter, as medical costs were lower than anticipated.

Meanwhile, net income attributable to shareholders went up 10.1% year-on-year to $1.53 billion ($1.17 per share) during the quarter ended on September 30th.

Earnings per share, which exclude special items, were reported at $1.84 during the third quarter, thus, exceeding the median analyst estimate of $1.77 per share.

CVS Health also said it now forecast full-year adjusted earnings within the range of $6.97 to $7.05 per share, up from a previously expected range of $6.89 to $7.00 per share.

Analyst stock price forecast and recommendation

According to CNN Money, the 24 analysts, offering 12-month forecasts regarding CVS Health Corp’s stock price, have a median target of $73.50, with a high estimate of $89.00 and a low estimate of $61.00. The median estimate represents a 3.62% upside compared to the closing price of $70.93 on November 6th.

The same media also reported that at least 17 out of 27 surveyed investment analysts had rated CVS Health Corp’s stock as “Buy”, while 8 – as “Hold”.

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