Headquartered in Rhode Island, CVS Health (CVS) is a healthcare company in the U.S. It includes CVS Pharmacy, CVS Caremark, and Aetna, among many other brands.
The company recently released its fourth-quarter results. Total revenues increased 10.1% to $76.6 billion on a year-over-year basis. In addition, adjusted earnings per share climbed 52% year-over-year to $1.98.
Management expects adjusted earnings of $8.10 to $8.30 per share for the full year of 2022.
Let’s look at the risk factors for CVS Health using the new Tipranks’ Risk Factors tool.
Risk Factors
CVS Health’s main risk category is Ability to Sell, which accounts for 12 of the total 47 risks identified. The next two major risks fall under the Legal & Regulatory and Production categories, which account for 11 and 10 risks, respectively.
In its recent report, the organization warned investors about two new risks.
The first new risk factor added by CVS Health falls under the Legal and Regulatory category. It pertains to environmental, social, and governance (ESG) issues.
Investors’ attention to ESG practices has grown recently, and the corporation has set specific targets to address these concerns as part of its ESG strategy. CVS Health warns investors that the company may not be able to meet all its ESG objectives since they are subject to risks and uncertainties, many of which are beyond the company’s control. CVS Health also highlights that any failure to meet these ESG targets might result in a plethora of concerns, causing harm to the company’s reputation, as well as a negative impact on its stock price and financial outcomes.
Another recently added risk for the organization falls under the Ability to Sell category.
CVS Health informs investors that since January 2022, the company has participated in Public Exchanges in eight states. It has developed and acquired the necessary technology and employees to better engage with public exchange customers through consumer-oriented sales and marketing channels. However, the business warns that pricing concerns exist in these Public Exchanges, which might erode profit margins. As a result, CVS Health warns that it may not be able to compete successfully on these exchanges and that the products it offers may not generate sufficient profits. In fact, CVS Health cautions investors that the Public Exchange products may not generate any profits at all in 2022 or the future.
Wall Street’s Take
Following the Q4 earnings release, Michael Cherny of BofA Securities maintained a Buy rating on the stock and increased the price target to $121 from $117. This implies about 14.9% upside potential to current levels.
Turning to Wall Street, the stock has a Strong Buy consensus rating based on 15 Buys and 3 Holds. The average CVS price target of $117.53 implies 11.6% upside potential to current levels.
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