Retail pharmacy chain CVS Health (CVS) is scheduled to announce its results for the fourth quarter of 2024 before the market opens on Wednesday, February 12. CVS stock has declined nearly 29% over the past year, as elevated medical costs in the company’s health insurance unit, Aetna, continue to weigh on its profitability. Analysts expect CVS Health’s earnings per share (EPS) to decline by about 57% year-over-year to $0.92.
Maximize Your Portfolio with Data Driven Insights:
- Leverage the power of TipRanks' Smart Score, a data-driven tool to help you uncover top performing stocks and make informed investment decisions.
- Monitor your stock picks and compare them to top Wall Street Analysts' recommendations with Your Smart Portfolio
Meanwhile, Wall Street expects Q4 2024 revenue to rise 3.5% to $97.09 billion compared to the prior-year quarter. CVS has been taking several measures to reduce costs and improve profitability.
Analysts Weigh in on CVS’ Upcoming Earnings
Ahead of the Q4 results, UBS analyst Kevin Caliendo reduced his price target for CVS stock to $59 from $62 and reiterated a Hold rating. The analyst thinks that the Q4 EPS and 2025 guidance estimates do not seem particularly high. He added that the long-term risk/reward profile for the stock looks much better, and the catalyst path following earnings could be relatively favorable.
However, Caliendo continues to be on the sidelines on CVS Health stock as the new management’s ability to reconnect with its long-term investors, who exited the MCO (Managed Care Organization) space in Q4 2024, is important for re-rating the stock, though this might take time.
Meanwhile, Edward Jones analyst Ashtyn Evans upgraded CVS Health stock to Buy from Hold, as he believes that the company could be an attractive turnaround story, with the potential for the new management to improve the Aetna health insurance division. He expects CVS to strengthen Aetna by redesigning plans and reducing costs.
However, Evans cautioned that this turnaround faces above-average risks, including intense competition and the possibility of additional government regulation in the pharmacy benefit manager (PBM) business. He noted that while the drugstore industry is facing reimbursement challenges, CVS is working with PBMs to build a new reimbursement model. He expects CVS to drive higher earnings by becoming a one-stop shop for healthcare services via a combination of its health insurance business, PBM, and the drugstore chain.
Options Traders Anticipate a Major Move on CVS’ Q4 Earnings
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 7.4% move in either direction in reaction to CVS Health’s Q4 2024 results.
Is CVS a Good Stock to Buy?
Overall, CVS Health stock earns Wall Street’s Strong Buy consensus rating based on 12 Buys and four Holds. The average CVS stock price target of $62.80 implies about 16% upside potential.
