CVS Well being (NYSE: CVS) is scheduled to report its Q2 2021 outcomes on Wednesday, Aug 4. We count on CVS Well being to doubtless submit income and earnings barely above the road expectations, primarily pushed by Covid-19 vaccine administration. The corporate will even profit from a restoration in its pharmacy administration enterprise. Whereas we count on the corporate to navigate nicely in Q2 primarily based on these elements, a rebound in whole process quantity will doubtless lead to greater profit prices, weighing on the general earnings progress, in our view. Moreover, our forecast signifies that CVS’ valuation is $92 per share, which is 12% above the present market worth of round $82, implying CVS inventory has extra room for progress. Our interactive dashboard evaluation on CVS Well being’s Pre-Earnings has further particulars.
(1) Revenues anticipated to be barely above the consensus estimates
Trefis estimates CVS Well being’s Q2 2021 internet revenues to be round $70.3 billion, barely above the $70.1 billion consensus estimate. Income progress is anticipated to be led by the Covid-19 vaccination, which CVS is administering in over 8,000 places. Nevertheless, given the rise in general vaccination charge, the demand for testing has come down. As such, CVS’ revenues from administering the Covid-19 testing is anticipated to see a sequential decline. On the Aetna facet, the corporate will doubtless proceed so as to add new Medicaid members. Additionally, given a rise in hospital visits, the corporate’s pharmacy enterprise doubtless rebounded in Q2. Our dashboard on CVS Well being’s Revenues affords extra particulars on the corporate’s segments.
2) EPS additionally prone to be simply above the consensus estimates
CVS Well being’s Q2 2021 adjusted earnings per share (EPS) is anticipated to be $2.09 per Trefis evaluation, in comparison with consensus estimate of $2.06. CVS Well being’s adjusted internet revenue of $2.7 billion in Q1 2021 mirrored an 8% rise from its $2.5 billion determine within the prior-year quarter. This may be attributed to greater revenues and an enlargement of margins. For the full-year 2021, we count on the adjusted EPS to be $7.65, in comparison with $7.50 seen in 2020.
(3) Inventory worth estimate 12% greater than the present market worth
Going by our CVS Well being’s Valuation with an EPS estimate of $7.65 and a P/E a number of of 12x in 2021, this interprets right into a worth of $92, which is 12% above the present market worth of round $82. Whereas the 12x determine compares with ranges of 9x – 10x seen over the latest years, we consider the P/E a number of will doubtless enhance with margin enlargement and higher earnings progress over the approaching years.
Notice: P/E Multiples are primarily based on Share Worth on the finish of the yr and reported (or anticipated) Adjusted Earnings for the complete yr.
Whereas CVS inventory might rise within the close to time period, 2020 has created many pricing discontinuities which may provide engaging buying and selling alternatives. For instance, you’ll be stunned how counter-intuitive the inventory valuation is for Flir Methods vs. CVS Well being.
See all Trefis Worth Estimates and Obtain Trefis Information right here
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Groups | Product, R&D, and Advertising Groups
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.