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CVS Stock Rose 5.7% Due to Strong Third-Quarter Results

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Nov. 7 2018, Updated 9:52 a.m. ET

Third-quarter results

CVS Health (CVS) reported better-than-expected third-quarter results on November 6. The company’s top and bottom line exceeded analysts’ estimates due to the strong comp script growth, higher drug prices, and growth in claim volumes. However, pricing and reimbursement pressure remained a drag.

CVS’s top line increased by $1.1 billion or 2.4% on a YoY (year-over-year) basis to $47.3 billion during the third quarter. Analysts expected CVS to report net sales of $47.2 billion. Improved sales, a favorable mix, lower interest expenses, and a decline in the effective tax rate cushioned the company’s bottom line. CVS’s bottom line increased more than 15% on a YoY basis and beat analysts’ expectation.

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Management expects to close the Aetna (AET) acquisition before Thanksgiving, which is a positive development. On October 10, CVS announced that the Department of Justice gave the preliminary nod to move forward with the Aetna deal. During the third-quarter conference call, Larry J. Merlo, CVS Health’s CEO and director, stated that the company received approvals from 23 out of 28 states.

Stock performance

CVS stock has risen 7.4% on a YTD (year-to-date) basis as of November 6. Most of the growth was driven by CVS Health’s better-than-expected third-quarter results. A strong performance on the sales and earnings front drove CVS Health’s share price 5.7% higher on November 6.

In comparison, Walgreens Boots Alliance (WBA) shares have risen 11.0% on a YTD basis. The S&P 500 Index has grown 3.1%.

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