Analyst Explains Why They Downgraded Their Rating on CVS Health (CVS)

In a report released today, Michael Wiederhorn from Oppenheimer downgraded CVS Health (CVSResearch Report) to Hold. The company’s shares closed on Friday at $52.81, close to its 52-week low of $51.77.

Wiederhorn noted:

“We are downgrading CVS to and removing our $85 price target. Furthermore, we are introducing our 2019/2020 EPS estimates of $6.75/$7.09. After recently assuming coverage, we are looking to reset the bar on our CVS rating, as we view it as more of a long-term opportunity given the potential timeline to execute on its strategy and the near-term legacy business challenges. Furthermore, we expect the drug-price noise out of Washington to continue for the foreseeable future. Lastly, we note that we remain bullish on the overall managed care sector—particularly in light of the recent weakness in the group—but CVS’s exposure to the business is still quite modest, and we would prefer other names in the space right now.”

According to, Wiederhorn is a 5-star analyst with an average return of 13.8% and a 63.6% success rate. Wiederhorn covers the Services sector, focusing on stocks such as Cross Country Healthcare, Addus Homecare Corp, and Community Health.

Currently, the analyst consensus on CVS Health is a Moderate Buy with an average price target of $76.47, a 44.8% upside from current levels. In a report issued on April 10, BMO Capital also initiated coverage with a Hold rating on the stock with a $58 price target.

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Based on CVS Health’s latest earnings release for the quarter ending December 31, the company reported a quarterly revenue of $54.42 billion and GAAP net loss of $419 million. In comparison, last year the company earned revenue of $45.69 billion and had a net profit of $996 million.

Based on the recent corporate insider activity of 71 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of CVS in relation to earlier this year.

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CVS Health Corp. engages in the provision of health care services. It operates trough the following segments: Pharmacy Services, Retail or Long Term Care, Health Care Benefits and Corporate. The Pharmacy Services segment offers pharmacy benefit management solutions.

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