CVS Health (CVS) reported third-quarter earnings early Wednesday that topped Wall Street estimates. CVS stock signaled a move to an eight-month high after the report.
XThe drugstore, pharmacy benefits manager and health insurance giant, which closed its $69 billion purchase of Aetna in November 2018, has had a challenging year, but its strategy was further validated by Tuesday's news that struggling Dow Jones rival Walgreens Boots Alliance (WBA) is in talks to go private.
CVS Earnings
Estimates: Wall Street expected CVS earnings per share to rise 2.3% to $1.77, according to Zacks Investment Research. Sales were expected to increase 33% to $63.03 billion, reflecting its Aetna acquisition.
Results: CVS earnings per share rose 6.4% to $1.84. Sales grew 36.5% to $64.81 billion.
Outlook: CVS Health raised guidance for full-year EPS to a $6.97-$7.05 from $6.89-$7.00. Analysts expected CVS earnings of $6.99 a share before the Q3 report.
CVS Stock
CVS stock rose 2.9% to 69.30 after the earnings report.
Shares have made a steady climb after hitting a 6-year low of 51.72 in May, having tumbled from just above 80 in December 2018. The selloff, to a large extent, reflected heightened regulatory risk stemming from Democrats' Medicare for All plans and a now-sidelined effort by the White House to target prescription benefit managers, like CVS Caremark.
Since late July, CVS stock has been outperforming the S&P 500 index.
CVS stock remains far below a proper buy point, but things are looking up. CVS has an 81 Relative Strength Rating from IBD out of a possible 99.
Solid earnings news and an upbeat outlook for Dow Jones component UnitedHealth (UNH) on Oct. 15 have given health care stocks another look. UnitedHealth served as the closest model for the CVS-Aetna merger. UnitedHealth combines the No. 1 health insurer with its OptumRX PBM and a growing health services empire.
Walgrens stock rose 1.3% early after popping 2.6% Tuesday on the go-private report.
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The post CVS Health Earnings Top Wall Street Estimates; Medical Giant At 8-Month High appeared first on Investor's Business Daily.
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