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What's in the Cards for CVS Health (CVS) in Q2 Earnings?
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CVS Health (CVS - Free Report) is scheduled to report second-quarter 2018 results on Aug 8, before the opening bell. Last reported quarter, the company delivered a positive earnings surprise of 6.47%. Its average trailing four-quarter beat is 2.57%.
Let’s take a look at how things are shaping up prior to this announcement.
Factors at Play
CVS Health has so far progressed well with its 2019 PBM selling season. Per the last-reported numbers, client retention rate was in line with year-ago quarter rates and the company was more than halfway through the 2019 renewals. This momentum is expected to be seen in the to-be-reported quarter as well.
Despite a tough pricing competition, CVS Health is currently gaining on high level of service and execution, a competitive pricing along with unique integrated model.
The company is also upbeat about sustaining a solid year-over-year earnings trend in the second quarter of 2018, realizing gains from the Pharmacy Services segment. Such a performance can be attributable to higher specialty pharmacy and pharmacy network claim volumes as well as brand inflation.
Management stated that CVS Health’s specialty business is its top priority to help the company expand its customer base. It is poised to capitalize on this opportunity on the back of wide and differentiated offerings including Specialty Connect.
Further, the company expects drug price inflation, product launches and higher utilization to fuel growth. We expect the Pharmacy Services segment to be a stable growth platform.
CVS Health also projects a promising performance in the to-be-reported quarter, primarily banking on script utilization at retail. The company has projected a 1.25-2% rise in consolidated net revenues for the second quarter.
Within the Retail/Long-Term Care Segment, revenue growth is expected in the 4.5-6% range and operating profit growth in mid- to high-single digits. Retail same store sales growth is estimated in the band of 4.75-6.25% and adjusted script comps are likely to increase 7.75-9.25%.
Within the PBM Segment, the company projects revenues to grow (-)1.25% to (+)1.5% in the second quarter. Operating profits are expected to decline by mid- to high-single digits. Per CVS Health, the timing of PBM profit delivery is somewhat in the second quarter owing to certain factors.
On the flip side, continued reimbursement pressure, rising generic dispensing rate and recent generic drug introductions have been affecting the business.
Here is What Our Quantitative Model Predicts:
Per the proven Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has maximum chances of beating estimates if it also has a positive Earnings ESP.
CVS Health has a Zacks Rank #2, which increases the predictive power of ESP. However, its Earnings ESP of -0.02% leaves surprise prediction inconclusive.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, the Zacks Consensus Estimate for second-quarter adjusted EPS of $1.61 reflects a 21% increase year over year.
Stocks to Consider
Here are a few medical stocks with the right combination of elements to beat estimates this time around:
BioScrip, Inc. has an Earnings ESP of +3.22% and is a Zacks #2 Ranked stock.
Hill-Rom Holdings, Inc. has an Earnings ESP of +0.15% and a Zacks Rank of 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
What's in the Cards for CVS Health (CVS) in Q2 Earnings?
CVS Health (CVS - Free Report) is scheduled to report second-quarter 2018 results on Aug 8, before the opening bell. Last reported quarter, the company delivered a positive earnings surprise of 6.47%. Its average trailing four-quarter beat is 2.57%.
Let’s take a look at how things are shaping up prior to this announcement.
Factors at Play
CVS Health has so far progressed well with its 2019 PBM selling season. Per the last-reported numbers, client retention rate was in line with year-ago quarter rates and the company was more than halfway through the 2019 renewals. This momentum is expected to be seen in the to-be-reported quarter as well.
Despite a tough pricing competition, CVS Health is currently gaining on high level of service and execution, a competitive pricing along with unique integrated model.
CVS Health Corporation Price and EPS Surprise
CVS Health Corporation Price and EPS Surprise | CVS Health Corporation Quote
The company is also upbeat about sustaining a solid year-over-year earnings trend in the second quarter of 2018, realizing gains from the Pharmacy Services segment. Such a performance can be attributable to higher specialty pharmacy and pharmacy network claim volumes as well as brand inflation.
Management stated that CVS Health’s specialty business is its top priority to help the company expand its customer base. It is poised to capitalize on this opportunity on the back of wide and differentiated offerings including Specialty Connect.
Further, the company expects drug price inflation, product launches and higher utilization to fuel growth. We expect the Pharmacy Services segment to be a stable growth platform.
CVS Health also projects a promising performance in the to-be-reported quarter, primarily banking on script utilization at retail. The company has projected a 1.25-2% rise in consolidated net revenues for the second quarter.
Within the Retail/Long-Term Care Segment, revenue growth is expected in the 4.5-6% range and operating profit growth in mid- to high-single digits. Retail same store sales growth is estimated in the band of 4.75-6.25% and adjusted script comps are likely to increase 7.75-9.25%.
Within the PBM Segment, the company projects revenues to grow (-)1.25% to (+)1.5% in the second quarter. Operating profits are expected to decline by mid- to high-single digits. Per CVS Health, the timing of PBM profit delivery is somewhat in the second quarter owing to certain factors.
On the flip side, continued reimbursement pressure, rising generic dispensing rate and recent generic drug introductions have been affecting the business.
Here is What Our Quantitative Model Predicts:
Per the proven Zacks model, a company with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has maximum chances of beating estimates if it also has a positive Earnings ESP.
CVS Health has a Zacks Rank #2, which increases the predictive power of ESP. However, its Earnings ESP of -0.02% leaves surprise prediction inconclusive.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, the Zacks Consensus Estimate for second-quarter adjusted EPS of $1.61 reflects a 21% increase year over year.
Stocks to Consider
Here are a few medical stocks with the right combination of elements to beat estimates this time around:
Illumina, Inc. (ILMN - Free Report) has an Earnings ESP of +1.73% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
BioScrip, Inc. has an Earnings ESP of +3.22% and is a Zacks #2 Ranked stock.
Hill-Rom Holdings, Inc. has an Earnings ESP of +0.15% and a Zacks Rank of 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>