CVS Health (CVS) stock is spiraling Friday after the pharmacy chain and health benefits provider announced the appointment of a new CEO.
Effective October 17, David Joyner took over as president and CEO of CVS Health, replacing Karen Lynch, who had been in the position since February 2021. Joyner has 37 years of experience in the healthcare and pharmacy benefit management industries, most recently serving as executive vice president of CVS Health and president of CVS Caremark.
"There is no greater honor than to lead a company whose mission and purpose are completely focused on improving health," Joyner said in a statement. "I came back to CVS Health in 2023 because I believed I could give more to the company, and I take this opportunity today for the same reason. I am proud to continue working side by side with our 300,000 colleagues who are building a world of health around every consumer."
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The news comes less than three weeks after reports surfaced that CVS was conducting a strategic review of its business and had hired bankers to assist in exploring options, including a possible breakup of its retail and insurance units.
CVS Health's preliminary Q3 results fall short
In the press release, CVS also provided preliminary guidance for its third quarter, calling for earnings per share in the range of $1.05 to $1.10.
The forecast falls well below analysts' expectations for third-quarter earnings of $1.70 per share, according to Yahoo Finance.
"In light of continued elevated medical cost pressures in the Health Care Benefits segment, investors should no longer rely on the Company's previous guidance provided on its second-quarter 2024 earnings call on August 7, 2024," CVS added.
Is CVS stock a buy, sell or hold?
CVS Health has had a rough year on the price charts, as well. Shares have fallen more than 26% since the start of 2024, but Wall Street remains bullish on the healthcare stock.
According to S&P Global Market Intelligence, the average analyst target price for CVS is $70.10, representing implied upside of 20% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm Argus Research is one of those with a Buy rating the large-cap stock and a $75 price target.
The shares trade at an attractive valuation and CVS boasts a healthy 4.2% dividend yield which seems sustainable, wrote Argus Research analyst Christopher Graja in an October 2 note. However, the analyst admitted that he's "disappointed with the recent performance of the Health Care Benefits business" and is "not sure that our Buy recommendation can withstand another guidance cut or a deterioration in credit-quality metrics."
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