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
Be a smarter, better informed investor.
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
-
Here's Why I'm Upgrading to the iPhone 17The iPhone 17 is here. Learn what's new, where the best deals are and whether it's worth the switch.
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
September Fed Meeting: Live Updates and Commentary
The September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
-
I'm a Retirement Planner: These Are Three Common Tax Mistakes You Could Be Making With Your InvestmentsDon't pay more tax on your investments than you need to. You can keep more money in your pocket (or for retirement) by avoiding these three common mistakes.
-
Want to Shave 10 Hours Off Your Workweek? A Startup Expert Shows How AI Can HelpArtificial intelligence is overhauling how companies operate, freeing up entrepreneurs and their workers to skip the menial stuff and get down to business.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts SayThe August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings, From a Financial PlannerHolding too much of one company's stock can put your financial future at risk. Here are four ways you can strategically unwind such positions without triggering a massive tax bill.
-
Beyond Banking: How Credit Unions Serve Their CommunitiesCredit unions differentiate themselves from traditional banks by operating as member-owned financial cooperatives focused on community support and service rather than shareholder profit.
