With a market cap of $69.6 billion, Woonsocket, Rhode Island-based CVS Health Corporation (CVS) is a leading pharmacy innovation company offering pharmacy benefit management, mail order and retail pharmacy, disease management programs, and retail clinics. It operates through three segments: Health Care Benefits; Health Services; and Pharmacy & Consumer Wellness.
Companies worth more than $10 billion are generally described as “large-cap” stocks and CVS Health fits this criterion perfectly. The company provides health insurance products, pharmacy benefit management solutions, and consumer wellness offerings such as prescription and over-the-counter drugs, personal care, and beauty products.
Shares of the drugstore chain and pharmacy benefits manager are trading 33.6% below its 52-week high of $83.25, recorded in January. The company has declined 4.3% over the past three months, lagging behind the broader SPDR S&P Health Care Services ETF’s (XHS) marginal return over the same time frame.
In the longer term, CVS stock is down nearly 30% on a YTD basis, underperforming XHS’ 8% gain. Moreover, shares of CVS have dipped 24.8% over the past 52 weeks, compared to XHS’ 11.6% return over the same time frame.
To confirm its bearish trend, CVS has been trading below its 50-day and 200-day moving averages since April despite some fluctuations.
Shares of CVS Health climbed 11.3% on Nov. 6 due to a combination of positive earnings surprises and strategic developments. The company reported better-than-expected Q3 adjusted EPS of $1.09 and revenue of $95.4 billion. The revenue growth was driven by strong performance in the Health Care Benefits segment, which saw a 25.5% year-over-year increase, and the Pharmacy & Consumer Wellness segment, which grew 12.3% due to higher prescription volumes. Furthermore, the announcement of a restructuring plan aimed at cost reductions and organizational efficiency boosted investor confidence.
However, CVS’ underperformance becomes more evident when compared to its rival, The Cigna Group (CI), which surged 23.4% over the past 52 weeks and 6.1% on a YTD basis.
Despite CVS lagging behind its industry peers, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 24 analysts in coverage, and the mean price target of $67.30 suggests a 21.7% premium to its current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart