Updated Aug 11 at 4:03pm ET.
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Medicare, the government health program for seniors, has capped the cost of weight-loss drugs at $50 per month. This change opens up access for millions of people who previously could not afford these expensive medications.
For CVS, this is a significant volume opportunity. As one of the largest pharmacy chains in the country, it is now competing with Amazon and Walmart to capture this new wave of prescriptions. This shift helps turn its retail pharmacies into high-traffic health hubs, which is a core part of its plan to offset the decline in traditional drugstore sales.
Source: Forbes
UBS set a price target of $126, which is well above the average analyst target of $110. This suggests the firm sees much more value in the company's integrated healthcare model than most of its peers. If the stock reached this level, it would represent a gain of roughly 30 percent.
Source: UBS
Baird raised its target price from $94 to $107 after the company reported earnings that were better than analysts expected. This move reflects growing confidence that CVS is successfully managing costs within its Aetna insurance business. The new target suggests the stock has room to rise about 11 percent from its current level.
Source: Robert W. Baird
CVS reported a very strong second quarter, with adjusted earnings of $2.58 per share, easily beating the $1.87 that analysts expected. Total revenue grew about 7 percent to $106.1 billion. The main driver was the insurance segment, Aetna, which is finally getting a handle on medical costs after a period of high spending that had worried investors.
Because of this performance, management raised its profit goals for the full year. They now expect adjusted earnings to be between $7.90 and $8.10 per share, up from their previous estimate of $7.30 to $7.50. The company also announced a new partnership with Eli Lilly to expand its weight-loss drug program, which should help drive more traffic to its pharmacies and clinics. This quarter suggests the company's long-term plan to combine insurance and care is starting to pay off.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
CVS is now carrying common medications for dogs and cats at all of its pharmacy locations. By offering pet prescriptions alongside human ones, the company is trying to become a one-stop shop for household health needs. While this is a small addition compared to its massive insurance and pharmacy business, it is a simple way to increase foot traffic and customer loyalty.
Analysts recently raised their price targets for CVS following the company's strong second-quarter earnings report. Most analysts, 35 out of 41, rate the stock a buy with an average target of $110, suggesting 18% upside from today's price.
CVS has a very consistent habit of beating analyst expectations, often by a wide margin. This suggests management is conservative with its forecasts and the business is performing better than the market expects.
| Expectation | |
|---|---|
| EPS | $1.66 |
| Revenue | $104.10B |
