CVS Health Corporation (CVS)

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CVS Health already bakes in more than the worst-case scenario, TD Cowen 'would add here'
By: Investing.com | May 19, 2023

TD Cowen analysts reiterated an Outperform rating and $111 price target on CVS Health (NYSE:CVS) in a note Friday, telling investors that the current trough valuation "overly discounts" near-term risks.

"We would add here," said the analysts. "Concerns over a number of issues, including PBM transparency and 340B volumes among others, have driven shares down ~25% since Feb., which is much more than a worst-case EPS impact of 16% (lose all 340B vol. & 20% of PBM AOI), or $1.42 to our 2024 adjusted EPS estimate of $9.03."

CVS shares have fallen more than 24% in 2023 and over 25% in the last 12 months, trading above the $69 mark.

They said the shares, which are currently trading near 10-year trough multiples, already bake in more than the worst-case scenario from the headwinds.

"At current levels, we view shares as very attractive, given they do not reflect the likelihood of CVS returning to low double-digit/mid-teens adjusted EPS growth starting in 2025, and recommend adding here," they concluded.

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