CVS Well being (NYSE:CVS) is slated to launch its third-quarter Fiscal 2022 outcomes on November 2 earlier than the market opens. Wall Avenue expects CVS to submit adjusted earnings of $2.00 per share. In the meantime, income is pegged at $76.78 billion, representing a year-over-year development of 4%.
Notably, CVS has a powerful observe file of reporting earnings beats. It has crushed estimates in all the previous eight reported quarters.
In response to Credit score Suisse analyst A.J. Rice, CVS’s 2024 goal of double-digit EPS development could also be negatively impacted by Centene’s (NYSE: CNC) determination to grant its pharmacy profit supervisor (PBM) contract to Cigna/Specific Scripts (NYSE: CI) final week.
He acknowledged, “Beneath the belief that CVS will lose $30 bln of drug spend at 2% pre-tax margins would recommend a 3.5% EPS headwind or ~$0.35 EPS to our 2024 EPS of $9.90.”
Regardless of the contract loss, Rice reiterated a Purchase score on CVS Well being inventory with a value goal of $117 (23.55% upside potential).
Is CVS a Good Inventory to Purchase?
As per Tipranks, the Wall Avenue group is clearly optimistic in regards to the inventory. Total, the inventory instructions a Sturdy Purchase consensus score primarily based on 11 Buys and two Holds. CVS Well being’s common value goal of $122 implies 28.83% upside potential from present ranges.
Notably, CVS inventory has a top-notch Sensible Rating of a “Excellent 10” on TipRanks, indicating that the inventory has sturdy potential to outperform market expectations.
Conclusion: Take into account Buying CVS Inventory
CVS inventory has remained resilient regardless of a troublesome macro backdrop. It has gained 5% over the previous 12 months versus the S&P, which is down 16% over the identical corresponding interval.
By way of valuation, the inventory is buying and selling at 11x P/E. This represents an approximate 40% low cost to its peer-group common of 19x.
Subsequently, traders can consider shopping for the inventory forward of its earnings primarily based on its discounted valuation in comparison with the peer group in addition to the road’s confidence within the long-term development potential of the inventory.
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