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Shareholders of CVS Health Corporation (NYSE:CVS) will be pleased this week, given that the stock price is up 16% to US$67.53 following its latest third-quarter results. CVS Health reported in line with analyst predictions, delivering revenues of US$67b and statutory earnings per share of US$0.93, suggesting the business is executing well and in line with its plan. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from CVS Health's 22 analysts is for revenues of US$277.2b in 2021, which would reflect a credible 4.5% increase on its sales over the past 12 months. Statutory per-share earnings are expected to be US$6.05, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$276.1b and earnings per share (EPS) of US$6.07 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$80.88. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic CVS Health analyst has a price target of US$104 per share, while the most pessimistic values it at US$61.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the CVS Health's past performance and to peers in the same industry. It's pretty clear that there is an expectation that CVS Health's revenue growth will slow down substantially, with revenues next year expected to grow 4.5%, compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.0% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CVS Health.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$80.88, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for CVS Health going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 1 warning sign for CVS Health you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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