An executive order aimed at lowering drug prices has been signed, which is considered a significant development for the pharmaceutical sector. This directive calls for a report to be developed assessing the role of intermediaries in drug pricing.
Last year, pharmaceutical companies invested a record $31 million in lobbying efforts in the U.S. capital. A key focus of these efforts was to shift the blame for high drug prices onto pharmacy-benefit managers. These middlemen, which include companies like CVS Health (CVS, Financial), have been identified as contributing factors to the increasing costs within the industry.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for CVS Health Corp (CVS, Financial) is $74.84 with a high estimate of $90.00 and a low estimate of $60.00. The average target implies an upside of 15.09% from the current price of $65.03. More detailed estimate data can be found on the CVS Health Corp (CVS) Forecast page.
Based on the consensus recommendation from 29 brokerage firms, CVS Health Corp's (CVS, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for CVS Health Corp (CVS, Financial) in one year is $87.79, suggesting a upside of 35% from the current price of $65.03. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the CVS Health Corp (CVS) Summary page.
CVS Key Business Developments
Release Date: February 12, 2025
- Adjusted Earnings Per Share (EPS): $1.19 for Q4 2024.
- Adjusted Operating Income: $2.7 billion for Q4 2024.
- Revenue: Nearly $98 billion for Q4 2024, a 4% increase year-over-year.
- Full Year Cash Flow from Operations: Approximately $9.1 billion.
- Health Care Benefits Revenue: Approximately $33 billion, a 23% increase year-over-year.
- Medical Membership: Approximately 27.1 million, roughly flat sequentially.
- Medical Benefit Ratio: 94.8%, increased by 630 basis points year-over-year.
- Health Services Revenue: Approximately $47 billion, a 4% decrease year-over-year.
- Pharmacy & Consumer Wellness Revenue: Over $33 billion, a 7% increase year-over-year.
- Same-Store Pharmacy Sales: Increased 13% year-over-year.
- Same-Store Prescription Volumes: Increased nearly 6% year-over-year.
- Store Closure Plan: Completed three-year plan, maintaining over 27% retail pharmacy script share.
- 2025 Adjusted EPS Guidance: $5.75 to $6.00.
- 2025 Revenue Guidance for Health Services: Approximately $185 billion.
- 2025 Revenue Guidance for Pharmacy & Consumer Wellness: Approximately $134 billion.
- 2025 Cash Flow from Operations Guidance: Approximately $6.5 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CVS Health Corp (CVS, Financial) reported fourth-quarter adjusted earnings per share of $1.19 and adjusted operating income of $2.7 billion, indicating strong financial performance.
- The company provided initial full-year 2025 guidance for adjusted EPS in the range of $5.75 to $6.00, reflecting confidence in future growth.
- CVS Health Corp (CVS) has made significant progress in stabilizing its Aetna business, particularly in Medicare Advantage, which is expected to improve margins.
- The company has successfully implemented innovative pricing models like Caremark's TrueCost and CVS Pharmacy's CostVantage, enhancing transparency and affordability.
- CVS Health Corp (CVS) achieved a record volume year for Signify, completing over 3 million in-home health evaluations, contributing to revenue growth.
Negative Points
- The Health Care Benefits segment experienced an adjusted operating loss of $439 million, driven by a higher medical benefit ratio and other factors.
- CVS Health Corp (CVS) anticipates a decline in aggregate membership by over 1 million members, primarily in Individual Exchange and Medicare products.
- The company faces challenges with elevated medical cost trends, particularly in its Medicare Advantage and Individual Exchange businesses.
- CVS Health Corp (CVS) expects adjusted operating income for the Pharmacy & Consumer Wellness segment to decline approximately 5% in 2025.
- The company's leverage ratio remains above its long-term target, indicating ongoing financial pressure despite efforts to manage debt.
