Health services provider CVS Health Corporation (CVS) operates in three segments, Health Care Benefits; Pharmacy Services; and Retail/LTC. On September 5, 2022, CVS announced…
its agreement to acquire Signify Health, Inc. (SGFY) for $30.50 per share in cash, amounting to a total transaction value of approximately $8 billion. If this acquisition carries through, it is expected to strengthen the company’s ability to provide new product offerings in a multi-payor approach.
On November 2, 2022, Karen S. Lynch, CVS’ President and CEO, said, “We continue to execute on our strategy with a focus on expanding capabilities in healthcare delivery, and the announced acquisition of Signify Health will further strengthen our engagement with consumers.”
In addition, CVS has paid dividends for 14 consecutive years. Its dividend payouts have increased at a 3.2% CAGR over the past three years. Its current dividend yield is 2.33%, and its four-year average yield is 2.79%.
Over the past month, CVS has lost marginally to close the last trading session at $94.62. It has lost 8.3% year-to-date. However, the stock has gained 4.4% over the past year. Moreover, Wall Street analysts expect the stock to hit $122.00 in the near term, indicating a potential upside of 28.9%.
Here is what could shape CVS’ performance in the near term:
Solid Financials
CVS’ total revenues increased 10% year-over-year to $81.16 billion for the third quarter ended on September 30, 2022. Its adjusted operating income came in at $4.23 billion, up 3.9% year-over-year. Moreover, its adjusted EPS came in at $2.09, up 6.1% year-over-year.
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Attractive Valuation
CVS’ forward EV/Sales of 0.59x is 85% lower than the industry average of 3.91x, while its forward EV/EBITDA of 9.15x is 31.1% lower than the industry average of 13.28x. Also…
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