2024-07-11 10:55:34 ET
Summary
- Regulatory scrutiny over CVS's PBM business may limit upside potential, with concerns about manufacturer-linked rebates and fees expected to come under focus.
- The stock's FCF yield is currently below average and is likely to remain that way, given the disappointing outlook for the year.
- EPS estimates for the current year continue to be trimmed lower, but FY25 earnings could see double-digit growth, and P/E valuations still look attractive versus the historical average.
- The dividend profile still looks resilient.
- The charts look mixed, but institutional interest is yet to pick up, and the stock won't benefit from any buyback support this year.
Introduction
Roughly 10 months ago, when the large-cap healthcare conglomerate- CVS Health Corporation ( CVS ), was going through a rough ride, we had mooted the idea of going long on the stock. From then, until the end of Q1 this year, the CVS stock had performed reasonably well, generating returns of +15%, but it all went pear-shaped from Q2 onwards; in effect, the stock is down by -16% since the publication of our article in September, even as its peers from the healthcare space have notched up steady gains of +13% on average....
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For further details see:
CVS Health: Downgrading To Hold As FTC Regulatory Scrutiny Ramps Up