WBA - Walgreens Boots Alliance, Inc.
| Previous Close | 54.82 |
| Open | 54.86 |
| Bid | 0.00 x 800 |
| Ask | 0.00 x 1200 |
| Day's Range | 54.37 - 55.11 |
| 52 Week Range | 49.31 - 86.31 |
| Volume | 3,639,641 |
| Avg. Volume | 5,452,280 |
| Market Cap | 49.167B |
| Beta (3Y Monthly) | 0.76 |
| PE Ratio (TTM) | 10.65 |
| EPS (TTM) | 5.11 |
| Earnings Date | Oct 9, 2019 - Oct 14, 2019 |
| Forward Dividend & Yield | 1.83 (3.34%) |
| Ex-Dividend Date | 2019-08-19 |
| 1y Target Est | 58.47 |
- Barrons.com•3 days ago
Acting Defense Secretary Richard Spencer Bought Walgreens Stock, Sold Yeti
Spencer recently disclosed other transactions, including selling Zoetis stock and buying Verra Mobility shares.
- InvestorPlace•4 days ago
The Worst Appears to Be Over for CVS Stock
CVS Health (NYSE:CVS) can't catch a break. Neither can its shareholders. CVS stock is at roughly half the value it was at its mid-2015 peak. And it only recently came off its May multi-year lows. Good news about cancelled drug-rebate plans that would have cost it a fortune shoved shares higher earlier this month. Now, that move has largely come undone. The bears appear to remain in charge.Source: Shutterstock Nothing lasts forever though. While CVS Health stock may look and feel stuck in a downtrend, don't despair: what the company is building is very much the future of healthcare.The organization gave stakeholders of CVS stock another glimpse of that future this week.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Desperate MeasuresThe short version of a story most everyone knows: the state of the healthcare system in the U.S. is laughable. Its sheer size and complexity, coupled with misguided regulation, has made it unaffordable for all. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip That's a key part of the reason strange-bedfellows Amazon (NASDAQ:AMZN), JPMorgan Chase (NYSE:JPM) and Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) made this announcement last year: they're forming their own healthcare company of sorts for their employees. Though not insurance per se, it was a means of offering low-cost clinical care in-house. Further, this move would also cull at least some of their healthcare and insurance expenses.However, it's hardly the only instance where such lines have crossed.Case in point: CVS rival Walgreens Boots Alliance (NASDAQ:WBA) has partnered with clinics to offer in-store (or near-store) primary care, as has CVS.Arguably, CVS took the boldest even if not the biggest step towards an industry shakeup last year. That was when the pharmacy giant announced its intent to merge with health insurer Aetna. The deal closed in late 2018.Responses were mixed. Concerned observers noted it was an opportunity for self-serving steering that crimps competition even if it doesn't kill it. Others lauded the idea, pointing out that with one less middleman, the industry could lower costs.Regardless, this is the new norm for the very same healthcare industry that collectively priced itself into the trouble it's now looking to escape.CVS Health carried the ball a bit further downfield this week, unveiling a home dialysis system that just began its required clinical trials. Disruption UnderwayIt wasn't a surprise, but it was a milestone nonetheless.CVS Health was and is a pharmacy, and now facilitates clinical/frontline care. Aetna is an insurer and can keep hospital and drug prices in check. However, neither arm has pushed its way onto biotech equipment turf until now.Last year's news of the planned project already put dialysis rivals into action. Davita (NYSE:DVA) as well as Fresenius Medical Care (NYSE:FMS) have both ramped up efforts to facilitate more at-home dialysis. Such moves saves patients from visits to their specialty clinics.That paradigm shift should also lower total costs for dialysis patients.Meanwhile, the Aetna/CVS deal has put the nation's traditional frontline players on notice. Ken Kaufman, managing director and chair of consulting firm Kaufman Hall, commented earlier that year that the once-unlikely pairing was "a shot across the bow of hospitals in America."In the same vein, the creation of Haven -- the name given to the entity co-created by JP Morgan, Amazon and Berkshire -- was a shot across the bow of pharmacies like CVS and insurers like Aetna.It's CVS, however, that's leading the charge of disruption, even if that means disrupting itself. CVS Stock Is Undervalued and OversoldCVS Health may be the face of a new era of integrated healthcare, but investors are clearly not buying it. Extending a pullback that began in 2015, 2017's initial efforts to team-up with Aetna along with uncertainty as to how the business might change under President Trump have ultimately worked against CVS Health stock.That concern largely has no merit though. Indeed, with Rite Aid (NYSE:RAD) on its heels and Walgreens not taking the same bold step CVS did to shape its own future rather than be shaped by it, investors have seemingly overlooked CVS Health's impressive past and compelling future. Click to EnlargeRevenue was growing and will continue to do so. The introduction of Aetna's business a couple of quarters ago had no bearing on the revenue trajectory. Analysts expect earnings per share of CVS stock to slide once this year. And then, it will likely move on to record-breaking levels for the newly combined companies. That's a victory in and of itself. Consider that the new-share issuance of CVS Health stock partly funded the acquisition.Notice the addition of Aetna will also stabilize CVS's otherwise wide seasonal swings in income.Perhaps the most bullish argument of all is the stock's forward-looking price-earnings ratio of 7.9. With or without challenges ahead, that's dirt cheap given the profit CVS Health could drive simply by coasting ahead. Looking Ahead for CVS Health StockThat being said, two key clues suggest the sentiment tide may have finally taken a turn for the better.One of them is the way CVS shares have repeatedly found a technical floor near $51.70. This is plotted with a yellow, dashed line on the chart. Bears have tested that floor three times since March, but it held up every time. It's a foundation the bulls can build on now that it's been established. Click to EnlargeThe other noteworthy nuance here is the amount of bullish volume that's kept CVS stock propped up. While February's pullback volume was significant, the same number of buyers (and perhaps more) have wanted to step back in.It's the first time we've seen this much technical support aided by this much buying interest.There's still work to be done, and there's still plenty of risk ahead. This week has been less than thrilling, with the buyers unwilling to follow through on last week's jolt. The bearish case is starting to crumble under the weight of the bullish case though. Its vertical and horizontal integrations appear to be working.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post The Worst Appears to Be Over for CVS Stock appeared first on InvestorPlace.
- Business Wire•4 days ago
Walgreens Earns Best Place to Work in 2019 Disability Equality Index
Walgreens for the third consecutive year has been recognized with the top-score of 100 percent on the 2019 Disability Equality Index® (DEI), a national benchmarking tool on corporate policies and practices related to disability inclusion and workplace equality. The DEI is a joint initiative by Disability:IN and the American Association of People with Disabilities (AAPD), and is considered the most comprehensive benchmarking tool for corporate disability inclusion developed by disability advocates and business leaders.
- Bloomberg•4 days ago
Microsoft Results to Get Lift From Office, Windows Cloud Bundle
(Bloomberg) -- As Microsoft Corp.’s popular Windows 7 software nears its expiration date, the company is funneling corporate customers toward a subscription-based package of products rather than a simple renewal, boosting revenue even as personal-computer growth stagnates.The Redmond, Washington-based company reports earnings late Thursday, and results are expected to get a lift from Microsoft 365, a cloud-based bundle of the Windows 10 operating system, versions of Office productivity software, and security programs -- the products Microsoft’s business clients want to have for every worker.Microsoft Chief Executive Officer Satya Nadella has been trying to shift more customers to subscriptions, which provide a smoother stream of recurring revenue. Unlike the older business model, where corporations bought each program outright and could use it as long as they liked, companies typically keep a subscription rolling -- otherwise they lose access to the software. The Microsoft 365 package of products was unveiled two years ago, and has gained greater traction this year, as customers replace aging Windows 7 licenses and as Microsoft signs Azure cloud-services deals that include the 365 software.“This was a golden move by Nadella, as it has been a major catalyst for enterprises to upgrade,” said Daniel Ives, an analyst at Wedbush Securities. “Many fence-sitting customers have now gone to the M365 package.” Microsoft has yet to disclose total numbers of subscribers or revenue for Microsoft 365.Microsoft for several years has been focusing on sales of internet-based software and seeking to gain ground in the web-services market on leader Amazon.com Inc. The company has also benefited from new Azure cloud contracts with big customers like Walgreens Boots Alliance Inc. and, last month, Providence St. Joseph Health. Some of those deals include Microsoft 365 sales -- Walgreens signed up to buy licenses for 380,000 workers, and Providence took 119,000.The end of extended support for Windows 7 looming in January is one reason customers are switching to Microsoft 365, said Executive Vice President Rajesh Jha. After that, any customer who wants to remain on Windows 7 will have to pay for customized support updates to the operating system -- or go without. “Customers know Windows 7 is reaching end of life,” said Jha, who oversees Microsoft’s Experiences and Devices division. “And as customers modernize their desktop, they are also thinking of modernizing their Office to a cloud-connected version.”The product links two of Microsoft’s main historical revenue streams -- Windows and Office -- leveraging the appeal of cloud software and continued corporate reliance on Windows. While Microsoft has topped forecasts in recent quarters on the strength of its cloud programs, Windows has also frequently performed better than the overall PC market.This month, Unilever also signed a Microsoft 365 deal for its 155,000 employees, as did AT&T Inc. for about 250,000 workers.Walgreens wanted the software so it could update in-store systems that are running Windows 7, according to Vish Sankaran, chief innovation officer at Walgreens Boots. Previously, many of the company’s retail staff didn’t have access to these programs at all -- they were reserved for managers and people back at corporate headquarters. That’s also part of Microsoft’s push with M365: to convince customers like retailers, health-care outfits and industrial firms to buy software for front-line workers, like nurses and pharmacists, who will use software to better keep track of patients and tap Microsoft’s Teams chat app to coordinate care. If successful, it will add up to more paying users.In its fiscal fourth-quarter earnings report after the close of the market in New York, Microsoft is projected to say sales rose 9% to $32.8 billion. Profit in the period ended in June is predicted to be $1.22 a share, the average estimate of analysts surveyed by Bloomberg.Microsoft’s shares have risen 34% this year. Its market value has jumped above $1 trillion, making it the most valuable publicly traded company. The company is riding a wave of cloud-computing contracts and a renewed role as a tech-market leader after Nadella overhauled the software maker’s strategy, engineering and and sales execution. That has attracted investors to the stock, along with Microsoft’s apparent insulation from the regulatory investigations facing some of its biggest rivals.Just the Numbers4Q EPS estimate $1.22 (range $1.18 to $1.29)4Q revenue estimate $32.78 billion (range $32.41 billion to $33.59 billion)Productivity and Business Processes $10.73 billionIntelligent Cloud $11.04 billionMore Personal Computing $10.99 billion1Q revenue estimateProductivity and Business Processes $10.94 billionIntelligent Cloud $10.03 billionMore Personal Computing $11.02 billionData34 buys, 2 holds, 2 sellsAvg PT $147.63 (8.3% upside from current price)Implied 1-day share move following earnings: 3.7%Shares rose after 9 of prior 12 earnings announcementsAdjusted EPS beat estimates in 12 of past 12 quartersShares up 34% this year vs S&P 500 Index up 19%TimingEarnings release expected July 18 after market closeConference call websiteTo contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net;Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.netTo contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- GuruFocus.com•5 days ago
US Indexes Close Lower for a 2nd Day Wednesday
S&P; 500 down 0.65% Continue reading...
- Zacks•5 days ago
3 REITs to Buy Amid Q2 Earnings Season
Time is always right to consider real estate investment trusts or REITs, as they provide solid income for investors.
- Investor's Business Daily•5 days ago
CVS Health Tests Home Dialysis System; DaVita, Fresenius Hit
CVS Health began a trial of a home dialysis system that could cut into a market controlled by Fresenius Medical and DaVita. But all three stocks fell.
- TheStreet.com•6 days ago
Walgreens Takes a Turn for the Better
Walgreens Boots Alliance is looking much healthier on the charts. The WBA chart, below, shows that after the stock peaking at the beginning of last December, it went into a sudden and dramatic decline to around the $66.00 level. After trying to stabilize in January and February at $72.00, WBA entered another vertical decline followed by a significant gap down at the beginning of April.
- InvestorPlace•7 days ago
CVS Stock Is a Buy as It Prepares to Take on Private Insurance
Since July of 2016 CVS Health (NYSE:CVS) has been a nightmare for investors. This time three years ago, CVS stock traded at a little more than $97, today it trades at something closer to $57.Source: Shutterstock Despite making what seemed like smart moves, like dropping cigarettes, converting to a health format, adding clinics, and buying Aetna, the stock has continued to sink.But analysts have suddenly warmed to CVS' story. In the last month, the shares are up 8%. On July 11 alone they rose 4.68%. Even at that price, CVS is still selling at a retailer's multiple of less than half its revenue.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's an illustration of the difference between the marketplace and the stock market. It's a great opportunity for investors with a long-term view. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Chronic Conditions and CVS StockAmerica spends 18% of its GDP on health care, but 75% of that is spent treating and monitoring chronic conditions. These are preventable diseases like heart disease, diabetes, and kidney disease.This is what CVS has been focused on. By delivering services as well as products through almost 10,000 stores, the company hopes to gain a bigger share of this $1.1 trillion bonanza. Preventing obesity, treating alcoholism and ending smoking could be worth trillions more.Analysts have been focusing on drugs, in the form of Amazon (NASDAQ:AMZN) and its Pillpack service or CVS' Caremark Pharmacy Benefit Manager, but CVS has been diversifying away from the pure-intermediary model.Aetna alone brings 22 million insurance accounts to the party. If CVS' network can reduce the costs of covering those people, it can offer lower prices that increase that number. That's what its HealthHUB strategy is all about.Deliver the most common services and treatments from a storefront, add front-line clinics for primary care, of which CVS already has 1,100, and you have more cost control than any insurance rival. CVS hopes to turn 1,500 of its outlets into HealthHubs in the next two years. CVS Stock and the Real CompetitionCVS' rivals in this area aren't Amazon or even Walgreens Boots Alliance (NYSE:WBA). They're other insurers like United Healthcare (NYSE:UNH), which dominates the private insurance market and managed care companies like Centene (NYSE:CNC), which uses company-owned facilities to handle Medicare and Medicaid at a profit.Investors haven't credited any of CVS' moves for political reasons. Democrats talking about converting all health care to a publicly funded system makes them nervous. The possible end of Obamacare, pricing tens of millions out of the insurance market, also makes them nervous.But CVS' strategy can work in either case. If Democrats expand Medicare the companies that can cut costs fastest will benefit. If people are left without insurance, stores that offer the lowest-cost primary care and services grow. The Bottom Line on CVS StockIn its first-quarter report for 2020, delivered May 1, CVS earned $1.4 billion, $1.62 per share fully diluted, on revenues of $61.6 billion. This is the first fiscal year that has begun since the Aetna deal closed. CVS raised earnings guidance for the full year. Its 50 cent per share dividend, with its fat 3.6% yield, is thus affordable.Because of its retail operation, CVS is the only insurer that can rival United Healthcare in size. That company's revenues for the first quarter were $60.3 billion. It has four times the market share of Aetna in private insurance.Most analysts consider United Healthcare the biggest winner in health care, but macro trends may be running against it. CVS stock is a winner for income investors right now, with that fat, affordable dividend.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN and CVS. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post CVS Stock Is a Buy as It Prepares to Take on Private Insurance appeared first on InvestorPlace.
- Motley Fool•8 days ago
U.S. CBD Sales to Grow an Average of 107% Annually Through 2023
A new report projects nearly $24 billion in U.S. cannabidiol sales by 2023.
- Business Wire•10 days ago
Walgreens Mobilizes in Advance of Tropical Storm Barry to Support Customers, Team Members and Communities in Storm’s Projected Path
Walgreens is taking proactive measures to assist customers, team members and communities currently in the projected path of Tropical Storm Barry, and is preparing to fully support any impacted regions in its aftermath. Prescription Drug Preparedness: In advance of the storm, Walgreens is underscoring the importance of prescription preparedness for its pharmacy patients in areas that may be impacted. Walgreens suggests patients store any current medications in a waterproof bag – even if the bottle is empty.
- InvestorPlace•11 days ago
Dow Jones Today: More Fed Fun, but Healthcare Weakness Caps Gains
Albeit in modest fashion, stocks gained Thursday amid heightened expectations the Federal Reserve could proceed with lowering interest rates this month, sending the Dow Jones Industrial Average above 27,000 for the first time.Source: Shutterstock While it appears unlikely that the Fed will lower rates by 50 basis points this month, markets are increasingly comfortable with the notion of 0.25% reduction followed by more of the same in September.The Nasdaq Composite was today's offender among the major U.S. indexes, sliding 0.08% while the S&P 500 gained 0.23%. The Dow added 0.85%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsGains for the Dow and S&P 500, in particular, could have been better if not for weakness in the healthcare sector, the second-largest sector weight in the S&P 500. In late trading, all three of the Dow's pharmaceutical names were lower with Merck & Co. (NYSE:MRK) being the index's worst loser with a loss of 4.5%. Politics were at play."The Trump administration is backing down from a controversial effort to lower drug prices, only days after its first major industry reform was overturned by a federal judge," reports CNN. * 10 Stocks to Sell for an Economic Slowdown Likewise, Sen. Kirsten Gillibrand (D-NY) is looking to jump-start her scuffling 2020 presidential campaign by unveiling ideas for lower drug prices. In other words, pharmaceuticals stocks were hit by both political parties today.Now, onto some Dow winners. Speaking Of Healthcare…It was not all bad news for Dow healthcare names today. Just look at UnitedHealth (NYSE:UNH), which surged 5.53%. The managed care giant, often highlighted in this space, has been finding its groove in recent weeks and stands to benefit from lower drug prices.Keeping with the theme of selling pharmaceuticals, shares of Walgreens Boots Alliance (NASDAQ:WBA) slipped 0.01% after the company said it will raise its quarterly dividend by 4% at 45.75 cents a share, marking the 44th consecutive year the company has boosted its payout. A Bullish NoteShares of Microsoft (NASDAQ:MSFT) nudged up 0.4% after Cowen initiated coverage of the stock with an "outperform" rating and a price target of $150. The stock is up 37% year-to-date and 19 of 20 analysts have the equivalent of "strong buy" ratings on it. A Fine FinancialGoldman Sachs Group (NYSEARCA:GS) jumped 2.61% on above average volume on news that the Wall Street behemoth is looking to extend its reach in the world of digital assets. As was noted here yesterday, a slew of financial services stocks report earnings next week, and Goldman is one of the bellwethers of that group, so today's buying in the name could also be a sign traders are expecting the stock to rally into earnings. Bottom Line: Let's Talk About EarningsWe have been highlighting potential areas for concern related to earnings season. With the calendar about to bring a spate of reports, investors should brace for some disappointments."Because of uncertainty around trade wars and global growth, a bulk of U.S. companies are lowering the bar for their second-quarter earnings. Of the 114 companies that have issued earnings guidance for the period, 77% have issued negative forecasts, according to data from FactSet," reports CNBC.If there is a silver lining, it is that many of these dour expectations may already be baked into stocks.Todd Shriber does not own any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Dow Jones Today: More Fed Fun, but Healthcare Weakness Caps Gains appeared first on InvestorPlace.
- Investor's Business Daily•11 days ago
Cigna, CVS, UnitedHealth Jump After Trump Drops Drug Rebate Rule
The Trump administration dropped a drug rebate rule to squeeze profits of pharmacy benefit managers. Cigna, CVS, United Health and others soared. Some drugmakers rallied.
- Barrons.com•11 days ago
Delta, Walgreens, and Fastenal Raise Their Dividends
Delta’s quarterly payout will jump to 40.25 cents a share, up from 35 cents. Walgreens will boost its dividend by 4% to 45.75 cents, and Fastenal declared a dividend of 22 cents a share, up by half a cent.
- Reuters•11 days ago
UPDATE 2-Walgreens expands epinephrine shot partnership as shortage persists
Walgreens Boots Alliance Inc said on Thursday it expanded its partnership with Kaleo Inc to include the company's epinephrine auto-injectors for infants and toddlers in its pharmacies amid a national shortage of the emergency allergy shots. Walgreens already offers two other doses of Kaleo's emergency allergy shots, Auvi-Q, under a partnership that the drugstore chain entered with the company in September last year.
- Reuters•11 days ago
Walgreens expands collaboration to tackle epinephrine shot shortage
- Business Wire•11 days ago
Walgreens and Kaléo Expand Retail Pharmacy Collaboration to Include AUVI-q® (epinephrine injection, USP) 0.1 mg, the Only FDA-Approved Epinephrine Auto-Injector for Infants and Toddlers, 16.5 – 33 lbs
Walgreens and kaléo, a privately-held pharmaceutical company, today announced AUVI-q® (epinephrine injection, USP) 0.1 mg auto-injector is available at Walgreens locations nationwide. AUVI-q 0.1 mg is the first and only epinephrine auto-injector (EAI) approved by the U.S. Food and Drug Administration (FDA) for infants and toddlers weighing 16.5 to 33 pounds (7.5 to 15 kilograms). Through this collaboration, Walgreens is the first national retail pharmacy to offer the entire AUVI-Q auto-injector product line, which also includes AUVI-Q 0.3 mg and 0.15 mg doses.
- Market Realist•11 days ago
Walgreens Hikes Dividend, Stock Continues to Underperform
On Wednesday, Walgreens announced a 4% hike in its quarterly dividend. The new quarterly dividend will be payable on September 12.
- Motley Fool•11 days ago
After Hours: Costco Comps Climb, Walgreens Raises Dividend
Tonight's stock market news seems to center on the retail industry, with several big names across different sectors making the headlines.
- Zacks•12 days ago
Microsoft Partners Providence, Boosts Healthcare Presence
Microsoft (MSFT) to innovate technologies and offer computing infrastructure and artificial intelligence for shifting Providence's healthcare records to the cloud.
- MarketWatch•12 days ago
Walgreens will increase quarterly dividend by 4%
Walgreens Boots Alliance Inc. announced Wednesday that it would be increasing its quarterly dividend by 4% to 45.75 cents per share. The new dividend will be payable on September 12 to investors who own the stock as of August 20. This will be the forty-fourth consecutive year the company has increased its dividend. Shares of Walgreens have fallen 18.6% in the year to date, while the S&P 500 has gained 19.4%.
- Business Wire•12 days ago
Walgreens Boots Alliance Increases Quarterly Dividend
Walgreens Boots Alliance, Inc. (WBA) today announced that its board of directors has declared a quarterly dividend of 45.75 cents per share, an increase of 4 percent. This marks the 44th consecutive year that Walgreens Boots Alliance and its predecessor company, Walgreen Co., have raised the dividend. Walgreens Boots Alliance (WBA) is the first global pharmacy-led, health and wellbeing enterprise.
- Investopedia•12 days ago
Is 3M the Next General Electric?
3M is now the second worst performer in the Dow Industrial Average, risking replacement after a 43-year membership.
- Motley Fool•12 days ago
Why Walgreens Boots Alliance Stock Reversed Course in June
Walgreens' shares perked up last month following an upbeat third-quarter earnings report.
- InvestorPlace•12 days ago
If Everything is Going Wrong for CVS Health Stock, is That a Buy Signal?
When it comes to CVS Health (NYSE:CVS), there's no shortage of reasons to steer clear of CVS stock. Pharmacies are getting hammered by lower reimbursement rates and higher costs. Health insurers -- recall that CVS acquired Aetna last year -- are struggling. CVS Health stock is down 16.3% this year.Source: Mike Mozart via FlickrBut wait, there's more: That Aetna deal may be reversed. Amazon.com (NASDAQ:AMZN) looms, fueled by its PillPack acquisition and its Haven health care joint venture, with partners JPMorgan (NYSE:JPM) and Berkshire Hathaway (NYSE:BRK.B).Those risks have led to an ugly chart for CVS Health stock. In March, CVS stock touched its lowest level in almost six years. Since then, the shares have traded mostly sideways, returning to those lows several times before a recent, modest, bounce.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut at the lows, CVS becomes an interesting contrarian pick. CVS stock is cheap - - and close to absurdly so. Some of the headwinds facing the company should reverse at some point. The legal uncertainty surrounding Aetna doesn't necessarily seem like bad news. And the threat of Amazon may be overblown, as it so often has been.That's not to say those risks aren't real. And with a huge debt load post-Aetna, CVS stock absolutely can fall further. Still, with support seemingly intact and the valuation pricing in those concerns, the risk-reward surrounding CVS Health stock looks attractive. CVS Health Stock Tanks … And So Do PeersPerhaps the biggest change surrounding CVS stock of late is that the pharmacy business model has moved from being perceived as a strength to seen as a weakness. Pharmacies long were considered defensive stocks; even in an economic downturn, consumers still needed their prescriptions. Indeed, CVS earnings rose over 12% in 2009 -- at the same time the U.S. was dealing with the worst of the Great Recession. (To be sure, CVS stock still tanked as investors sold pretty much every U.S. equity.) * The 7 Top Small-Cap Stocks Of 2019 It's not just CVS that's struggling. Shares of Walgreens (NASDAQ:WBA), too, touched a nearly six-year low in late May. Rite Aid (NYSE:RAD) stock has collapsed to the point that a reverse split was required.Three key factors are behind the industry's troubles.One, pharmacies are receiving lower reimbursement rates from insurers. As efforts to rein in costs cascade through the health care system, pharmacies are taking the brunt.Another factor is that generic drugs aren't coming as quickly as they have in the past -- and they aren't as cheap as they used to be. Without steady savings from generics to offset lower rates, margins in the pharmacy business have crumbled.Adjusted operating income in CVS' retail/long-term care (LTC) segment declined 19% in the first quarter. While the LTC business struggled, the pharmacy business was a big driver. Walgreens highlighted similar pressures in its recent fiscal third quarter report.And, finally, front-end sales remain weak. For CVS, front-end sales declined 2.6% in 2017 and 1.5% in 2016. A 0.5% increase in 2018 still suggests negative growth over the three-year period. Whether that weakness is coming from e-commerce competition, improved convenience stores from fuel sellers like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), or other factors, isn't entirely clear yet. But here, too, Rite Aid and Walgreens are seeing similar trends. Amazon and PillpackEssentially, the pharmacy business looks tough right now. And it may get tougher. Amazon long has been considered a potential entrant in the pharmacy space. That speculation only intensified after the e-commerce giant acquired PillPack last year.As Luke Lango detailed in February, Amazon appears to be a real threat to CVS Health -- and to CVS Health stock. And that's not just a matter of displacing in-store prescription sales through a mail-order model.Rather, it appears increasingly likely that Amazon is considering disrupting the pharmacy benefit manager (PBM) model. CVS is one of the three titans in PBM, through the Caremark business that it acquired back in 2007. Cigna (NYSE:CI) recently acquired Express Scripts, another big player, while UnitedHealth Group (NYSE:UNH) has substantial share through its OptumRx unit.As Barron's noted, about 70% of earnings, even after the Aetna deal, come from the retail pharmacy and the Caremark PBM. Investors fear those profits are at significant risk. With health insurers not exactly setting the world on fire -- a basket of the largest health insurance stocks would be roughly flat over the last year -- it's not hard to see why CVS is trading at such paltry earnings multiples. Is The Aetna Deal At Risk?With all those risks, the last thing shareholders needed was another one. But now it appears the already-closed Aetna deal might be at risk.As InvestorPlace contributor Dana Blankenhorn detailed last month, a federal judge is reviewing the merger, and in theory could force the two companies to separate. Case law here is murky, and the odds that the court actually reverses an already-closed deal seem slim. But it is a possibility -- and one that could be close to disastrous for CVS Health.After all, it's not entirely clear how such a separation could even work. What happens to the $48 billion in cash that CVS paid to Aetna shareholders? Will they send bills? Would Aetna stock be re-listed? The practical considerations alone would seem to dissuade Judge Richard Leon from actually separating the two companies, were he so inclined. * 7 Retail Stocks to Buy That Are Down in 2019 Still, the risk is out there. And as one of many, investors have responded accordingly. But assuming a somewhat orderly split, even a reversal of the merger might not be bad news for CVS stock. Investors didn't really like the deal to begin with: CVS stock now is down by about 30% since it was announced. Would a reversal be greeted by more selling -- or a relief rally? The Case for CVS Health StockAgain, these worries can't be ignored. But there's also an appealing contrarian case for CVS Health stock.First, CVS stock is cheap. Ridiculously cheap as 2019 EPS guidance of $6.75-$6.90 was reaffirmed at the company's Investor Day last month. Even the low end of the range suggests CVS trades at 8.2x earnings.Meanwhile, at the same event, CVS guided for steady growth going forward: $7+ in 2020 EPS, followed by mid-single-digit growth in 2021 and 10%+ increases afterward. CVS could target EPS nearing $10 per share by 2024; assuming even a still-soft 12x multiple, the stock would more than double in five years even before a current 3.6% dividend yield.Debt funding the Aetna deal (for now) does help that multiple. But even on an EV/EBITDA basis, which includes the company's borrowings, a 7x+ multiple is the company's lowest in years. By any measure, CVS is priced for earnings declines - while management insists that growth is ahead.And management could be right. CVS is moving toward a diversified health care offering, between insurance, a PBM, and in-store care through its HealthHUBs. Reimbursement rate pressures may ease at some point. Front-end sales already are being de-emphasized, as the HealthHUBs replace space currently allocated to slower sellers.Contrarian investing always is tricky -- particularly when a company has the debt and the headwinds that CVS has. A stock like that never truly gets "too cheap". But CVS is cheap and management believes it will be a beneficiary of the transformation of U.S. health care. If management is even close to right, CVS stock will rally at some point.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post If Everything is Going Wrong for CVS Health Stock, is That a Buy Signal? appeared first on InvestorPlace.
