CVS Health shares close lower on Wednesday, first-quarter revenue exceeds estimates on strong same-store sales

CVS Health Corp’s (CVS) first-quarter revenue, reported on Wednesday, topped Wall Street estimates, supported by a 9% surge in same-store sales, as consumers rushed in to get prescriptions, cleaning supplies and other essential items during the COVID-19 pandemic.

CVS shares closed lower for the fifth time in the past ten trading sessions in New York on Wednesday. The stock went down 1.31% ($0.80) to $60.41, after touching an intraday high at $63.45, or a price level not seen since April 29th ($64.02).

Shares of CVS Health Corp have retreated 18.68% so far in 2020 compared with an 11.83% loss 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 8.3% year-on-year to $66.8 billion during the quarter ended on March 31st. That compares with a median analyst estimate of $64.01 billion.

According to CVS, more customers ordered 90-day prescriptions and got early refills of medications due to the pandemic. Pharmacy same-store sales rose 9.3% year-on-year, while same-store sales in the front store grew 8% year-on-year during the latest quarter.

Meanwhile, net income went up to $2.01 billion ($1.53 per share) during the first quarter, from $1.42 billion ($1.09 per share) in the same period a year ago.

Earnings per share, which exclude special items, were reported at $1.91 during the first quarter. Analysts on average had anticipated earnings of $1.63 per share. It was not immediately clear whether analyst estimates could be compared with reported earnings, since the coronavirus pandemic disrupts regular shopping patterns.

The drug store operator maintained its full-year 2020 adjusted earnings forecast within the range of $7.04 to $7.17 per share and its full-year cash flow estimate within the range of $10.5 billion to $11.0 billion.

“When facing any health crisis, including this pandemic, we’re uniquely positioned to understand consumer and patient needs and how to address them,” Larry Merlo, CVS’ Chief Executive Officer, said in a press release, cited by CNBC.

“This includes increasing access to medicine and virtual care, and testing thousands for the virus every day to ready our country to reopen safely,” Merlo added.

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 $79.00, with a high estimate of $109.00 and a low estimate of $65.00. The median estimate represents a 30.77% upside compared to the closing price of $60.41 on May 6th.

The same media also reported that at least 18 out of 27 surveyed investment analysts had rated CVS Health Corp’s stock as “Buy”, while 8 – as “Hold”.

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