June 19, 2019

CVS Stock Has More Going for It Than Just a 3.69% Dividend Yield


CVS stock very well could be the big bet you're missing



CVS Health (NYSE: CVS) faces two distinct headwinds that are putting pressure on CVS stock.

First, markets are cautious over the drug store and drug manufacturing market as the government pressure all players to lower drug prices.

Doubts over CVS’ acquisition of Aetna are adding more distractions for management in the near-term. With CVS stock testing the $51.72 yearly low on at least five occasions since March, what will it take for the stock to rebound?



CVS reported first-quarter earnings of $1.62 and also raised its full-year adjusted EPS guidance to $6.75 to $6.90. This is up from the previous guidance of $6.68 to $6.88 a share.

The Q1 beat and improved outlook are due largely to the inclusion of managed care operations. The company also included revenue from SilverScript Medicare Part D, which contributed $17.9 billion of revenue for the quarter.


Better synergies with Aetna also contributed favorably to the higher outlook. CVS expects it will exceed its target savings of $750 million in 2020. It found synergies stemming from the elimination of duplication in corporate and operational functions, medical cost savings such as formulary alignment, and purchasing efficiencies. By 2022, CVS forecast saving $1.5 billion to $2 billion, well above its deal synergy targets.




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