Rhode Island-based healthcare firm CVS Health Corp. (CVS) has reported better-than-expected financial results for the second quarter of 2021. The company owns several brands, including health insurance provider Aetna, pharmacy benefits manager CVS Caremark, and retail pharmacy chain CVS Pharmacy, among others.
CVS reported adjusted earnings per share (EPS) of $2.42, higher than the Street’s estimate of $2.06 but lower than last year’s EPS of $2.64. Total revenues increased 11.1% year-over-year to $72.6 billion, exceeding analysts’ expectations of $70.11 billion. The rise was driven by growth across all segments.
The Health Care Benefits segment’s revenues surged 11.1% year-over-year to $20.5 billion, mainly due to growth in the Government Services business. Total revenues of the Pharmacy Services segment rose 9.8% to $38.3 billion. This growth was driven by brand inflation, growth in specialty pharmacy and higher pharmacy claims volume.
The Retail/LTC segment’s revenues jumped 14.2% to $24.7 billion as a result of increased COVID-19 vaccinations and diagnostic testing, prescription volume and higher front store revenues. (See CVS stock chart on TipRanks)
The President and CEO of CVS Health, Karen S. Lynch, said, “This quarter was highlighted by broad sales and earnings outperformance, as well as sequential operating margin improvement.”
Furthermore, the company has lifted its guidance for 2021 and now expects to report adjusted EPS in the range of $7.70 to $7.80. It had earlier projected adjusted EPS to be in the range of $7.56 to $7.68.
Meanwhile, CVS’ shares closed nearly 2% higher at $84 on Tuesday.
Last month, Cowen & Co. analyst Charles Ryhee maintained a Buy rating on the stock with a price target of $105 (25% upside potential).
The analyst had expected an upside potential to his Q2 estimates across all business segments driven by “a number of data points, including strong adjusted claims growth in PBM, strong Rx growth in Retail/LTC, and modestly weaker-than-expected medical utilization in government business in HCB.”
Overall, the stock has a Strong Buy consensus based on 14 Buys and 3 Holds. The average CVS Health price target of $97.18 implies 15.7% upside potential. Shares of the company have gained 29.3% over the past year.
According to TipRanks’ Smart Score rating system, CVS scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.
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