CVS Health (CVS) stock is in negative territory Wednesday after the pharmacy chain and healthcare benefits provider reported mixed results for its second quarter and slashed its full-year profit forecast.
In the three months ended June 30, CVS said its revenue increased 2.6% year-over-year to $91.2 billion, driven by growth in its Health Care Benefits and Pharmacy & Consumer Wellness segments. However, its earnings per share (EPS) decreased 17.2% from the year-ago period to $1.83, primarily due to a decline in operating income in its Health Care Benefits segment.
"We have many points of differentiation that position us to win now and into the future," said CVS CEO Karen Lynch in a statement. "Our innovation is accelerating more transparent pharmacy reimbursement models, increasing the use of biosimilars, and providing better patient outcomes through our connected health care delivery assets."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results were mixed compared with what analysts were expecting. Wall Street anticipated revenue of $91.5 billion and earnings of $1.73 per share, according to Yahoo Finance.
For a second consecutive quarter, CVS reduced its full-year profit forecast. The company now anticipates earnings per share to arrive between $6.40 to $6.65, down from its previous forecast of at least $7.00. It's also guiding for cash flow from operations of approximately $9 billion, down from its previous forecast of at least $10.5 billion.
"The Company's guidance revision reflects continued pressure in the Health Care Benefits segment, partially offset by strong performance in the Health Services and Pharmacy & Consumer Wellness segments," CVS said.
Is CVS stock a buy, sell or hold?
CVS Health is down more than 20% for the year to date, but Wall Street remains bullish on the healthcare stock. According to S&P Global Market Intelligence, the consensus analyst target price for CVS stock is $67.74, representing implied upside of more than 17% to current levels. Additionally, the consensus recommendation is Buy.
Still, there are some on Wall Street that are hesitant. Financial services firm UBS Global Research, for instance, has a Neutral rating (equivalent to a Hold) and a $60 price target. And UBS analyst Kevin Caliendo issued a stern warning to investors ahead of earnings.
"It is a 'stay away' on this print," Caliendo wrote in an August 5 note. Analysts' consensus view was "challenging," he said. "The potential range of outcomes here is meaningful, thus while the stock is cheap relative to managed care peers, we have little conviction in the near-term outlook."
Related Content
-
Dow Adds 646 Points, Hits New Highs: Stock Market TodayIt was "boom" for the Dow but "bust" for the Nasdaq following a December Fed meeting that was less hawkish than expected.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
Dow Adds 646 Points, Hits New Highs: Stock Market Today
It was "boom" for the Dow but "bust" for the Nasdaq following a December Fed meeting that was less hawkish than expected.
-
I'm a Tax Attorney: These Are the Year-End Tax Moves You Can't Afford to MissDon't miss out on this prime time to maximize contributions to your retirement accounts, do Roth conversions and capture investment gains.
-
I'm an Investment Adviser: This Is the Tax Diversification Strategy You Need for Your Retirement IncomeSpreading savings across three "tax buckets" — pretax, Roth and taxable — can help give retirees the flexibility to control when and how much taxes they pay.
-
Dow Rises 497 Points on December Rate Cut: Stock Market TodayThe basic questions for market participants and policymakers remain the same after a widely expected Fed rate cut.
-
Could an Annuity Be Your Retirement Safety Net? 4 Key ConsiderationsMore people are considering annuities to achieve tax-deferred growth and guaranteed income, but deciding if they are right for you depends on these key factors.
-
I'm a Financial Pro: Older Taxpayers Really Won't Want to Miss Out on This Hefty (Temporary) Tax BreakIf you're age 65 or older, you can claim a "bonus" tax deduction of up to $6,000 through 2028 that can be stacked on top of other deductions.
-
JPMorgan's Drop Drags on the Dow: Stock Market TodaySmall-cap stocks outperformed Tuesday on expectations that the Fed will cut interest rates on Wednesday.
-
Meet the World's Unluckiest — Not to Mention Entitled — Porch PirateThis teen swiped a booby-trapped package that showered him with glitter, and then he hurt his wrist while fleeing. This is why no lawyer will represent him.
