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Analyst Blog

CVS Health Corporation’s (CVS - Free Report) subsidiary, CVS Pharmacy recently announced the voluntary withdrawal of its homeopathic teething products from online and retail stores. This withdrawal comes on the heels of the U.S. FDA’s warning to consumers to discontinue the usage of these products. Reportedly, these products pose a serious threat to the health of children and infants.

CVS Pharmacy offered homeopathic teething products in the form of tablets and gels, both through its retail and online stores. Now, the company has categorized this product line under "do not sell" in its store register system to prevent further sale of these items. These items include three Baby Orajel Naturals products, two CVS Homeopathic Infant's Teething products and five Hyland's Baby products.

Meanwhile, the FDA warning came after it received reports that homeopathic teething products are causing seizures, breathing issues, muscle problems, excessive drowsiness, skin problems, constipation, urination troubles or agitation among children. The FDA is advising parents to immediately dispose of the products in use.

Typically, homeopathic remedies are said to have active ingredients that are not hazardous. However, extensive research has shown that these homeopathic products are being manufactured improperly.

As per Medgadget report, the World Health Organization (WHO) has revealed that homeopathy has become the second largest medicine system, displaying an annual growth rate of 20–25% globally. The worldwide homeopathic market is expected to see a significant surge in the years to come. CVS Health, which has so far reaped benefits out of this surge, is now expected to face a huge blow from the product recall. We expect this recall to hurt the company’s Pharmacy segment to a great extent.

Zacks Rank & Key Picks

CVS Health currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the medical product sector are GW Pharmaceuticals plc (GWPH - Free Report) , Quidel Corp. (QDEL - Free Report) and NuVasive, Inc. (NUVA - Free Report) . GW Pharmaceuticals and Quidel sport a Zacks Rank #1 (Strong Buy) while NuVasive carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GW Pharmaceuticals recorded a 91.14% gain year to date, far better than the S&P 500’s 6.08% over the same time frame. The trailing 4-quarter average earning surprise also remains positive at 41.67%.

Quidel gained 13.87% in the past one year, higher than the S&P 500’s 11.02%. Over the next five years, the stock is estimated to record earnings growth rate of 20%, higher than the industry average of 14.8%. 

NuVasive surged 31.9% over the past one year compared to the S&P 500’s 11.02%. Over the next five years, the stock is expected to see 16.7% earnings growth compared to the industry average of 14.8%.

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