Analysts recommend a “buy”
Most of the analysts covering CVS Health (CVS) stock continue to recommend a “buy.” The company’s low valuation multiple, an expected improvement in its adjusted earnings, and the strong sales growth rate will likely drive CVS stock higher in the long run. CVS Health’s top line is expected to grow at a healthy double-digit rate in the near term due to the Aetna acquisition. Growth in prescription volumes is expected to support the net sales growth.
Strong sales and margin expansion are expected to drive CVS Health’s bottom line. However, reimbursement pressure and the higher outstanding share count are expected to drag the company’s earnings down in the near term. Short-term pressure on earnings is setting the direction for CVS stock and limits the upside.
Rating and target price
Among the 27 analysts providing ratings and a target price on CVS Health stock, 17 recommended a “buy,” while ten had a “neutral” outlook. Analysts maintained a consensus target price of $68.48 per share on CVS Health, which implies a potential upside of 28.3% based on the closing price of $53.39 on June 3.
Analysts recommended a “hold” on Walgreens Boots Alliance (WBA) stock. Walgreens’ bottom line is expected to remain pressured in the coming quarters, which keeps analysts on the sidelines.