CVS shares hit a three-week high on Wednesday, fourth-quarter profit, revenue exceed market expectations on pharmacy services, health care benefits strength

CVS Health Corp’s (CVS) fourth-quarter earnings and revenue, reported on Wednesday, topped Wall Street estimates, supported by strength in its pharmacy benefit management and health care benefits businesses.

CVS shares closed lower for the fourth time in the past ten trading sessions in New York on Wednesday. The stock edged down 0.14% ($0.10) to $73.75, after touching an intraday high at $75.18, or a price level not seen since January 21st ($76.01).

Shares of CVS Health Corp have retreated 0.73% so far in 2020 compared with a 4.60% gain for the benchmark index, S&P 500 (SPX).

In 2019, CVS Health’s stock went up 13.39%, thus, it again underperformed the S&P 500, which registered a 28.88% gain.

The drug store operator said its total revenue had surged 22.9% year-on-year to $66.89 billion during the quarter ended on December 31st. That compares with a median analyst estimate of $63.97 billion.

Revenue at CVS Health’s pharmacy benefit management division went up to $37.07 billion during the latest quarter from $34 billion in the same period a year ago.

Revenue at the company’s health care benefits business, which houses Aetna, went up to $17.15 billion during the quarter from $6.24 billion in Q4 a year earlier.

Revenue at CVS Health’s retail segment, which encompasses general merchandise and prescription refills, was little changed at $22.58 billion.

Meanwhile, net income attributable to shareholders was reported at $1.75 billion ($1.33 per share) during the quarter ended on December 31st, which compares with a loss of $419 million ($0.37 per share) in the same period a year earlier.

Earnings per share, which exclude special items, were reported at $1.73 during the fourth quarter, thus, exceeding the median analyst estimate of $1.68 per share.

CVS Health also said it forecast full-year 2020 adjusted earnings within the range of $7.04 to $7.17 per share.

“As we work to transform the way health care is delivered to millions of Americans, we are driving continued business performance and generating positive momentum across the enterprise,” CVS President and Chief Executive Larry Merlo was quoted as saying by CNBC.

“As a result of the significant progress we made in 2019, and meeting or exceeding our expectations for the year, we raised our outlook for 2020.”

Analyst stock price forecast and recommendation

According to CNN Money, the 24 analysts, offering 12-month forecasts regarding CVS Health Corp’s stock price, have a median target of $83.00, with a high estimate of $97.00 and a low estimate of $69.00. The median estimate represents a 12.54% upside compared to the closing price of $73.75 on February 12th.

The same media also reported that at least 17 out of 27 surveyed investment analysts had rated CVS Health Corp’s stock as “Buy”, while 8 – as “Hold”.

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