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What Analyst Ratings Indicate for CVS Stock

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Apr. 16 2019, Published 8:05 a.m. ET

Analysts suggest “buy”

Among the 27 analysts covering CVS Health (CVS) stock, 18 analysts suggest a “buy,” and nine analysts recommend a “hold.” Analysts have a target price of $73.04 per share, which implies an upside of 34.7% based on its closing price of $54.22 on April 15.

In comparison, Wall Street maintains a “neutral” outlook on Walgreens Boots Alliance (WBA) stock. Low growth expectations due to higher reimbursement pressure, challenges in the UK, and tough YoY comparisons are keeping analysts on the sidelines.

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Valuation

CVS Health stock is trading at a forward PE multiple of 8.0x, which is about 45% lower than its historical average multiple of 14.5x. CVS stock is trading at a multiyear low valuation. However, near-term pressure on earnings could limit the upside. Also, challenges in the legacy business remain a drag.

Analysts expect CVS Health’s bottom line to decline in fiscal 2019. However, low valuation and long-term growth prospects make analysts positive on the stock. CVS Health’s earnings are expected to stabilize in fiscal 2020 and register YoY growth on the back of cost reduction and an increase in the top line.

In comparison, Walgreens stock is trading at a forward PE multiple of 9.1x, which is about 43% lower than its historical average multiple of 16.0x.

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