This article was originally published on TipRanks.com
The rapid spread of the Omicron variant in the United States led to a surge in demand for COVID-19 vaccinations and tests. Consequently, CVS Health (NYSE: CVS) has revised its earnings guidance for 2021.
For 2021, the company now expects to post adjusted earnings per share in the range of $8.33 to $8.38, up from the prior expectation of $8.00 per share. GAAP earnings per share have also been revised upward to between $5.87 and $5.92 from $5.50 to $5.61.
Reasons Behind Updated Guidance
The company said that the retail segment performed well on the back of higher-than-expected coronavirus vaccinations in November and December. Additionally, elevated demand for over-the-counter COVID-19 testing in December acted as a tailwind.
Markedly, CVS Health’s health insurance unit performed above expectations despite higher coronavirus cases, mainly in the second half of the fourth quarter as deferred elective procedures offset elevated COVID-19 costs.
For 2022, CVS Health expects earnings of between $7.04 and $7.24 per share and adjusted earnings in the range of $8.10 to $8.30 per share.
Wall Street’s Take
Following the updated guidance, Bank of America Securities analyst Michael Cherny maintained a Buy rating on the stock and raised the price target to $117 (10.34% upside potential) from $115.
Cherny views the upward revision in guidance as “somewhat unsurprising,” but believes that CVS Health is well-positioned to help customers in dealing with the COVID pandemic.
Consensus among analysts is a Strong Buy based on 20 Buys and 3 Holds. The average CVS Health price target of $114.27 implies 7.76% upside potential. Shares have gained 45.1% over the past year.
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into CVS Health’s performance this quarter.
According to the tool, the CVS Health website recorded a 14.3% decrease in global visits in December compared to the same period last year. Also, a quarter-to-date comparison showed a fall of 6.99% compared to Q4 2020, while year-to-date website traffic growth stands at 57.81%.
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