CVS Health Posts A Blowout Quarter; Street Says Buy

CVS Health Corp’s (CVS) 1Q results beat analysts’ expectations driven by growth in all segments. Shares of the healthcare company rose over 2% in early trading on Tuesday.

CVS Health’s 1Q adjusted earnings increased 6.8% to $2.04 per share on a year-over-year basis and beat Street estimates of $1.71 per share. Revenues inched up 3.5% to $69.1 billion and surpassed the consensus estimate of $68.29 billion.

Health Care Benefits segment recorded revenues of $20.5 billion, up 6.7% year-over-year, while revenues at the Pharmacy Services unit grew 3.8% to $36.3 billion. Additionally, the Retail/LTC segment’s revenue came in at $23.3 billion, up 2.3%.

For 2021, the company projects adjusted EPS to be in a range of $7.56 to $7.68 per share, up from the prior guidance range of $7.39 to $7.55 per share. The consensus estimate stands at $7.53. Cash flow from operations is anticipated to be in the range of $12 billion to $12.5 billion. (See CVS Health stock analysis on TipRanks)

On April 14, Truist Financial analyst David S Macdonald lifted the stock’s price target to $88 (11% upside potential) from $80 and reiterated a Buy rating as part of a broader research note on Healthcare Services.

Macdonald remains bullish on the group, with expectations of strong 1Q earnings for most of the companies in the sector as a result of dissipating COVID-19 headwinds. Furthermore, amid an attractive reopening and a rebound in the economy, the analyst expects strong free cash flow for the group, with an increasing flight to quality set to further “tip the field in favor of scaled, high quality, well capitalized providers”.

The consensus rating among analysts is a Strong Buy based on 11 Buys and 4 Holds. The average analyst price target stands at $88.75 and implies upside potential of about 11.5% to current levels. Shares have increased around 28% over the past six months.

Based on 8 unique factors, CVS Health scores a “Perfect 10” on TipRanks’ Smart Score rating system, which implies that the stock is expected to outperform the market moving forward.

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