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CVS Health Posts Q2 Beat & Raises Guidance; Shares Pop 6.3%

Story Highlights

CVS Health reported stronger-than-expected Q2 results, topping both earnings and revenue estimates, driven by robust performance across all segments. Investors further cheered the raised FY22 EPS guidance.

CVS Health (CVS) shares jumped 6.3% on August 3 to close at $101.38 after the company delivered blowout second-quarter results and also raised its FY2022 guidance well above analyst expectations.

Based in the U.S., CVS Health Corp. is a healthcare company that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; and Aetna, a health insurance provider, among many other brands.

CVS Stellar Q2 Beat

CVS reported stellar quarterly earnings of $2.40 per share, significantly higher than analysts’ estimates of $2.18 per share. However, it was slightly lower than earnings of $2.42 per share reported in the prior-year period.

Similarly, revenue climbed 11% to $80.64 billion compared to the prior-year period and outpaced the Street’s estimate of $76.38 billion.

CVS Raises FY2022 Outlook

Based on robust Q2 results, management raised the financial guidance for FY2022.

The company now forecasts adjusted earnings in the range of $8.40 per share to $8.60 per share, which is higher than the prior guided range of $8.20 per share to $8.40 per share and the consensus estimate of $8.36 per share.

Further, cash flow from operations is forecast to be in the range of $12.5 billion to $13.5 billion, higher than the previously guided range of $12 billion to $13.0 billion.

CVS CEO’s Comments

CVS Health CEO, Karen S. Lynch, commented, “The continued success of our foundational businesses accelerated our strategy to expand access to health services and help consumers navigate to the best site of care.”

Wall Street’s Take on CVS

Following a robust Q2 beat, UBS analyst Kevin Caliendo increased the price target on CVS Health to $127 from $118 and reiterated a Buy rating.

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 11 Buys and 4 Holds. The average Datadog price target of $130.43 implies 1.5% upside potential to current levels.

Bloggers Weigh In on CVS

TipRanks data shows that financial blogger opinions are 87% Bullish on CVS stock, compared to a sector average of 66%.

Key Takeaway

CVS shares have massively outperformed the benchmark indices, gaining over 24% in the past year while the stock indices were in the red.

CVS reported a stellar beat despite a challenging operating environment, which is commendable. The company’s differentiated business model strategy bodes well for the stock in the long term, in sync with the management’s confidence and robust outlook.

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