CVS Health Corp Q3 Earnings Beats Estimates

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CVS Health Corp (NYSE:CVS) is the largest pharmacy health care provider in the United States. Based in Woonsocket, Rhode Island, CVS has over 7,900 pharmacies and medical clinics in 47 states. On Tuesday, November 4th, CVS released their Q3 report reflecting a strong quarterly performance.

Highlights from the Q3 report include adjusted earnings per share (EPS) of $1.15, a 9% year-over-year increase and beating the analyst estimate by two cents. During the same quarter of last year, CVS posted adjusted EPS of $1.05. The pharmacy and health care provider chain earned net revenue of $35.02 billion, beating the analyst consensus of $34.74 billion. 3Q net revenue illustrated a 9.7% year-over-year increase from $31.93 billion. Analysts expect that CVS will post $4.47-$4.50 for the current fiscal year.

President and Chief Executive Officer Larry Merlo was pleased with the report, noting “the better-than-expected revenue growth across the enterprise and expanding retail gross margins.” Merlo continued, “We also continued to deliver substantial free cash flow, enabling us to return more than $3.7 billion to our shareholders year to date. We are well on track to return more than $5 billion to our shareholders through dividends and share repurchases for the full year 2014.”

In addition, the end of the third quarter marked the last day CVS Health Corp (NYSE:CVS) sold cigarettes in stores. In February of 2014, CVS announced that they would stop selling cigarettes in all locations by October of 2014 to remain consistent with their mission of providing health care. Instead, CVS pledged to undertake a “robust national smoking cessation program.” CVS is rebranding to reflect their primary intention of being a health care provider. In addition to forgoing the estimated $2 billion annual profit made from cigarettes, CVS has changed its name from CVS Caremark to CVS Health.

CVS, November 5th, 2014

Open $86.33
1 Year High $87.88
1 Year Low $63.29
Daily Moving Avg $86.78
50 Day Moving Avg $82.11
Market Cap $101.50 billion
P/E Ratio 21.45


On Wednesday, November 5th, Frank Morgan from RBC Capital reiterated a Buy rating on CVS with a price target of $96. Morgan has an overall success rate of 64% recommending stocks with an average return of +9.2% per recommendation. He has rated CVS five times with an 80% success rate and an average return of +20.1% per CVS recommendation.

Separately on November 5th, Chris Graja of Argus Research also reiterated a Buy rating on CVS with a price target of $95. Graja has a 61% overall success rate recommending stocks with a +0.3% return per investment. However, Graja has a strong track record recommending CVS Health Corp (NYSE:CVS) with a 75% success rate over 4 ratings, earning an average of +14.7% average return per recommendation.

On average, the top analyst consensus for CVS is Moderate Buy.

CVS is reporting strong revenue and growth, but will they be able to sustain profits after dropping cigarettes from all stores and as it continues to embrace an image as a health care provider?

To see more recommendations for CVS Health Corp (NYSE:CVS), visit TipRanks today!

Sarah Roden writes about stock market news. She can be reached at [email protected]

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