CVS Health is set to report its first-quarter results, with revenues expected to come in at $90 billion, showing year-over-year growth of 5.5%. Earnings per share are anticipated to be around $1.74, slightly above the consensus estimate. However, it is lower than the previous year’s earnings of $2.20. CVS stock has shown little change in recent years, with performance fluctuating compared to the S&P 500. Despite underperforming in 2023, CVS is considered undervalued with a valuation estimated to be around $88 per share.
In the previous quarter, CVS Health saw revenue growth across all segments, with a 12% year-on-year increase in sales. Despite a slight decline in adjusted operating margin, the company reported a profit of $2.12 per share, a 4% rise from the prior year. The upcoming quarter is expected to see continued growth in the healthcare and pharmacy services businesses, driven by increased prescription volume and drug price inflation. Acquisitions made in the past year are also expected to contribute to the top-line expansion.
While higher costs, particularly benefits costs, may have an impact on the company’s overall performance in Q1, CVS stock is still considered attractive for long-term gains. Despite the anticipated decline in earnings, the steady growth of its core businesses and recent acquisitions position CVS Health for future success. Investors may consider picking up CVS stock for robust long-term growth potential.
With a current valuation of around 8x its forward expected earnings for the full year, CVS Health is trading at a lower multiple compared to its five-year average of 10x. Despite uncertainties in the macroeconomic environment, including high oil prices and elevated interest rates, CVS remains undervalued at its current price. The company’s peers in the healthcare sector and across industries may provide valuable comparisons for investors looking to make informed decisions.
As the healthcare industry continues to evolve, CVS Health’s focus on healthcare and pharmacy services is expected to drive its future growth. With a strong portfolio of businesses and recent acquisitions, CVS is well-positioned to capitalize on the changing landscape of the healthcare market. Investors may see potential for long-term gains by investing in CVS stock, given its undervalued nature and growth prospects in the healthcare sector.
