CVS - Embedded Expectations Analysis - 2021 03 15
CVS Health Corporation (CVS:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 13.5x Uniform P/E, implying bearish expectations for the firm. However, given management's confidence about achieving 2021 guidance, their digital capabilities, and their oncology business, market expectations are overly bearish and equity upside is likely warrantedSpecifically, management is confident they can deliver on their 2021 guidance, brand drug inflation will drive Pharmacy Services revenue growth, and that Transform Oncology Care now covers 30% of Aetna's insured oncology population. In addition, they are confident they have advanced their digital capabilities to create a seamless experience for clients across all segments and that millions of new customers will engage with the firm through their testing and vaccine administration services
Given management's confidence about achieving 2021 guidance, their digital capabilities, and their oncology business, market expectations are too bearish and equity upside is likely warranted
CVS Health is a health company. The company's segments are: Pharmacy Services, which provides a range of pharmacy benefit management solutions, including plan design offerings and administration, formulary management, and retail pharmacy network management services; Retail/Long-Term Care (LTC), which sells prescription drugs and general merchandise, including over-the-counter drugs, provides health care services through its MinuteClinic? walk-in medical clinics and conducts LTC pharmacy operations; and Health Care Benefits, which provides a range of voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental and behavioral health plans.
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