CVS Health Corporation (CVS) is down 1% today, making it an 8% loss on the week so far. The company’s latest earnings painted another disappointing picture, this time, as the healthcare-benefits segment struggled.

The company’s net income of $1.77 billion was quite a step back from $1.90 billion this time last year. This worked out to adjusted earnings per share of $1.83, well below the $2.21 posted in 2023 but ahead of the analyst consensus of $1.73.

Revenue was up 2.6% for the quarter to $91.23 billion, but this fell short of what Wall Street was expecting at $91.41 billion. CVS had been on a tear with 19 straight revenue beats but has now missed the consensus two quarters in a row.

The healthcare-benefits segment lagged in Q2 which the company says can be attributed to less-than-ideal Medicare Advantage star ratings for the Medicare product line in the 2024 payment year.

The segment still saw a 21.4% growth in revenue, but the margins are slim, which is why adjusted operating income fell  39.1% to $983 million.

This prompted leadership changes, including executive vice president and president of Aetna Brian Kane departing before his first year anniversary with the company. CEO Karen Lynch will overtake the segment’s leadership role.

The company also slashed guidance for the full year after the Q2 performance. Now, adjusted EPS is down to a range of $6.40 to $6.65. It was previously slated at $7 – but at the start of the year, the company pegged earnings as high as $8.30.

CVS has now fallen more than 26% through 2024 thus far, and the road ahead looks grim. We’ve taken a closer look at this situation in the VectorVest stock software and found 3 other things you should be aware of if you’re a current investor or are considering trading this stock.

CVS Has Fair Upside Potential and Timing, But Safety is Poor

VectorVest is a proprietary stock rating system that simplifies your trading strategy, empowering you to win more trades with less work and stress. 

You’re given all the insights you need for calculated, emotionless decision-making in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy.

You’re even offered a buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. Here’s what we uncovered for CVS:

  • Fair Upside Potential: The RV rating is a comparison of a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. This makes it a far superior indicator to the typical comparison of price to value alone. The RV rating of 0.96 is fair for CVS. However, the stock is overvalued with a current value of just $51.16.
  • Poor Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. CVS has a poor RS rating of 0.78. 
  • Fair Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. CVS has an RT rating of 0.86, which is a ways below the average but deemed fair nonetheless. 

The overall VST rating of 0.87 is fair for CVS as well, but the stock is currently rated a HOLD. Whether you’re currently invested in it or are looking for an opportunity to trade it, take advantage of this free stock analysis for CVS today and transform your trading strategy for the better with VectorVest!

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Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. CVS posted another disappointing performance in Q2 as one of its main business segments struggled, resulting in an earnings miss. The outlook keeps getting cut as well, suggesting the turmoil will continue. The stock itself has fair upside potential and timing with poor safety.

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