CVS Health $CVS showed investors solid work on turning the company around — for the fourth time this year it raised its profit and revenue outlook for 2025 and confirmed that the consolidation efforts of new CEO David Joyner are delivering results. Earnings per share are expected to reach 6.60–6.70 USD, which is slightly above consensus, and revenue is expected to exceed 400 billion USD, i.e., more than anticipated.
The problem arises when looking into 2026. The revenue outlook of “at least 400 billion USD” is notably below analysts' estimate (418 billion USD), which reminded investors that besides pharmacy and Aetna insurance the company still faces elevated costs for healthcare services for patients in government programs. Nevertheless, the earnings outlook of 7–7.20 USD per share keeps pace with the market, suggesting management believes margins are stabilizing.
CVS thus stands at an interesting point: the current year looks better than the market expected, but the question is the growth rate after 2025. Do you have $CVS in your portfolio? How do you view the company?
If it can grow at an 18% CAGR over the next 3–5 years, that’s not bad at all. I just don’t know how they plan to achieve that, and I don’t follow it at all, so I have no idea what’s changed there in the few years it’s been sideways.
The stock has been through a crisis. For the past three years it hasn’t been great. But a turnaround is in sight — I know we shouldn’t count our chickens yet, but I’m optimistic and still keeping my fingers crossed. It’s not for everyone, but you need to be twice as patient here and seize the opportunity.
Oh, and it makes up about 13% of my portfolio. :)
I still hold a fairly sizable position. We'll see how they perform, but they've already gotten past the worst and it should grow over the long term.
I had the company in my portfolio, but I sold it. It was struggling with crises at the time, and each report set it back, which forced me to get rid of it. I don’t feel like investing in it anymore and I’d rather choose other REITs like $O, for example.