CVS Health Corp (NYSE:CVS)
Consumer Staples - Food & Staples Retailing | Reports May 3, Before Market Opens
Key Takeaways
- The Estimize consensus is calling for $1.17 on $43.02 billion in revenue, 1 cent higher than Wall Street on the bottom line and $50 million in sales
- Acquisitions of Omnicare and Target Pharmacy reflects CVS’s commitment to the fast growing specialty care market
- Despite robust earnings growth, CVS stock has been relatively flat and typically doesn’t move around earnings season
Retailer and health care services company, CVS, is scheduled to report first quarter earnings Tuesday, before the market opens. The last two years were favorable for CVS as both revenue and earnings per share steadily increased. Last quarter featured double digit gains on both the top and bottom line with this quarter expected to be just as good. The Estimize consensus is calling for $1.17 on $43.02 billion in revenue, 1 cent higher than Wall Street on the bottom line and $50 million higher on sales. Compared to a year earlier, profits are expected to increase 3% while revenue could rise as much as 18%. Despite CVS’s recent gain, the stock has been relatively flat and typically doesn’t change during earnings season.
Lately a majority of CVS’s growth has come from strength in its specialty and retail pharmacy segments. Last quarter, revenue in pharmacy services increased 11.1% primarily driven by growth in specialty pharmacy. The company’s $12.7 billion acquisition of Omnicare reflects the company’s focus on the fast growing specialty care market. Meanwhile, CVS also plans to expands its retail pharmacy to Target stores nationwide. In a $1.9 billion deal, the buyout will expand CVS Health’s customer base and add a new retail channel for its products. Topping it all off, CVS maintains a strong balance sheet which allows them to issue generous capital return programs.
Still, CVS operates in a competitive landscape and must deal with poor economic conditions. Major competitors including, Walgreens Boots Alliance Inc (NASDAQ:WBA) and Walmart (NYSE:WMT) are expanding their pharmacy businesses to tap the high growth specialty avenue.
