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Bear of the Day: CVS Health (CVS)

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CVS Health (CVS - Free Report) is a pharmacy innovation company. Its offerings include pharmacy benefit management services, mail order, retail and specialty pharmacy, disease management programs, and retail clinics.

Analysts have taken a bearish stance on the company’s outlook, landing the stock into a Zacks Rank #5 (Strong Sell).

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Image Source: Zacks Investment Research

In addition, the company is in the Zacks Retail – Pharmacies and Drug Stores industry, which is currently ranked in the bottom 8% of all Zacks industries.

Let’s take a closer look at the company.

CVS Posts Weak Results

 

CVS shares have struggled to establish any strength in 2024, losing roughly 26% in value compared to an impressive 25% gain from the S&P 500. Quarterly results haven’t delivered sustained positivity for shares, with its recent release causing an initial bullish spike before giving up the post-earnings gains. 

Zacks Investment Research
Image Source: Zacks Investment Research

Concerning the latest quarterly print, the company beat our consensus EPS and sales expectations by 2% and 2.8%, respectively. Still, a notable profitability crunch has been a driver behind the poor share performance, with EPS declining 50% throughout the period.

Elevated medical costs have been behind the crunch, with the company expecting its current fiscal year results to be negatively affected by the development. The company’s guidance has been consistently lowered following quarterly results in 2024, but a newly-appointed CEO remains vigilant on slashing costs and returning the company to growth.

Bottom Line

Guidance cuts stemming from weak quarterly results paint a challenging picture for the company’s shares in the near term.

CVS Health (CVS - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.


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