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."
Sign up for Kiplinger’s Free E-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
-
A Guide to Music Streaming ServicesDeals Our guide to music streaming services from Spotify to Amazon Music, Tidal to Apple Music and how to find music streaming deals.
-
Stock Market Today: Markets Reflect Global UncertaintyExuberance fades as investors confront micro challenges and a murkier macro environment.
-
Stock Market Today: Markets Reflect Global Uncertainty
Exuberance fades as investors confront micro challenges and a murkier macro environment.
-
What's Better Than Investing in Crypto? These 'Boring' PicksCryptocurrency may be good for a thrill, but older investors are better off with assets like bonds, guaranteed annuities, CDs and maybe dividend-paying stocks.
-
Four Actions to Lessen Retirement Stress for Women (and Men)Saving for retirement is anxiety-inducing for everyone, especially women. Following this four-part action plan can help improve your financial security.
-
Year-End Retirement Tax Planning Actions if You Have $1 Million or MoreConsider implementing these four strategies before December 31 to potentially improve your tax situation for this year and the future.
-
Five Simple Strategies to Ensure a Happy RetirementEmployer retirement plans are great, but individual responsibility plays a huge role in retirement success. Here's how to empower yourself.
-
25 Financial Moves to Consider Before December 31Tidying up your financial house before the New Year kicks off will put you in a great position to have a financially satisfying and successful 2025.
-
Five Side Hustles You Could Turn Into a Full-Time BusinessYou might be able to capitalize on your expertise in ways you haven't thought of, possibly even leading to quitting your 9-to-5 job to do what you love.
-
Stock Market Today: Nasdaq Nabs New High After Jobs DataThe S&P 500 also closed at its highest level ever, while the Dow Jones Industrial Average was pressured by another down day for UnitedHealth stock.
