Shares of CVS Health (CVS) surged in trading even as the company reported mixed Q3 results. The healthcare company’s adjusted earnings nearly halved to $1.09 per share, below consensus estimates of $1.44 per share.
Furthermore, the company’s revenues increased by 6.3% year-over-year to $95.43 billion in the third quarter, surpassing Street estimates of $92.7 billion.
Additionally, CVS announced the appointment of Steve Nelson to head its Aetna medical insurance business. Nelson is the former CEO of UnitedHealthcare (UNH).
CVS Stock Is on a Decline
Year-to-date, CVS has declined by more than 20%, amid three consecutive cuts to its full-year guidance, leading to pressure from an activist investor to drive improvements. Adding to the company’s woes, CVS has been grappling with higher medical costs in its medical insurance business, Aetna.
CVS Did Not Issue a Formal Outlook
CVS expects rising medical costs to continue weighing on its performance this year. Consequently, the company did not issue a formal financial outlook, a spokesperson told CNBC. However, CVS will provide general expectations in its Q3 earnings call.
The company’s new CEO, David Joyner, commented, “Establishing credibility and earning the trust of our investors is one of my top priorities as the new leader of CVS Health. To achieve that, any guidance we provide should be achievable, with clear opportunities for outperformance. This is a core principle for me.”
Is CVS Stock a Good Buy Right Now?
Analysts remain cautiously optimistic about CVS stock, with a Moderate Buy consensus rating based on nine Buys and five Holds. The average CVS price target of $69.08 implies an upside potential of 24.8% from current levels. These analyst ratings are likely to change following CVS’s results today.
