CVS Health Corporation (NYSE: $CVS)

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CVS Health Corporation (NYSE: CVS) sells prescription medication, healthcare products, personal care products, beauty products, and wellness products. The company offers multiple channels to access health care locally and nationally. It has a user base of over 100 million people, to whom it delivers personalized, high-quality health care.

CVS Health Corporation Stock Performance

CVS Health stock has had a rough year. The stock is down 23.56% year-to-date. However, the stock has been trending upward recently. It was up 3.71% at the close of trading on December 5, 2023. The uptick in stock price came after the company released an upbeat forecast in its latest Investor Day event.

For FY23, the company projects revenues of $351.1-$357.3 billion. Its adjusted EPS projection is $8.50-$8.70. The company projects cash flow from operations at $12.5-$13.5 billion for FY23.

For FY24, the company projects revenue will be at least $366 billion, higher than the analysts’ projection of $345.81 billion. The company also projects an EPS of around $8.50 for FY24, which aligns with analysts’ estimates.

During Investor Day, CVS Health also announced an increase in quarterly dividends by 9.9% to $0.665 per share. It will pay dividends on February 1, 2024.

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Revamped Drug Reimbursement Program

During the Investor Day, CVS Health announced a revamped drug reimbursement program. Under the program, CVS will pay pharmacies back for the amount it pays for medication. The move has boosted investor confidence in the stock after prolonged concerns over a lack of transparency in its drug pricing.

The drug pricing issue greatly impacted the company’s stock in August, when Blue Shield of California announced it was dropping its services. At the time, the health insurance provider said it took action to cut drug costs for members. It said it would partner with Amazon Pharmacy and Mark Cuban’s Cost Plus Drug Company instead.

The FTC announced it was looking into CVS Health’s practices earlier in the year. Drug pricing is one of the few issues that has received bipartisan support. Its news strategy has helped re-ignite investor interest in the stock.

CVS Health Stock Forecast

Analysts are bullish about CVS stock, giving it a strong buy rating. The highest price target is $102, while the lowest is $76. It has an average price target of $87.73, a 23.53% upside based on its closing price of $71.02.

CVS Health Stock
CVS Health Stock chart

Should You Buy CVS Stock?

CVS stock has reacted positively to criticism over its opaque drug pricing strategy. Its new approach will allow it to compete with Mark Cuban’s Cost Plus Drug Company, which has gained market share recently. Given its substantial market share, it should help bolster investor confidence in the stock.

Another reason to invest in the stock is that dividend payouts have grown by nearly 169% over the past ten years. Its average yield of 3.49% is quite competitive, higher than the average S&P 500 Index’s dividend payout of 1.54%. For both value and dividend investors, CVS stock is a great option. Consequently, the strong buy rating by Wall Street analysts is accurate.

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