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What's in the Cards for CVS Health (CVS) in Q1 Earnings?
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CVS Health Corporation (CVS - Free Report) is scheduled to report first-quarter 2020 results on May 6, before the opening bell.
In the last reported quarter, the company delivered a positive surprise of 2.98%. It beat earnings estimates in each of the trailing four quarters, the average being 6.53%.
Let’s take a look at how things have shaped up prior to this announcement.
Factors at Play
Shares of CVS Health have been on a declining trend since the beginning of February like most of the pharmacy benefits managers (PBM) as the coronavirus outbreak disrupted the market for non-COVID-19 and elective healthcare cases. Further, with office shutdowns and implementation of Stay-at-Home culture, walk-in-clinical appointments and patient visits were significantly lower in the last two months of the quarter. Hence, CVS Health, which has a huge PBM client base otherwise, is expected to have seen a significant decline in its quarterly revenues.
However, during the first quarter, the company took several PBM business initiatives together with its clients to balance the burgeoning interest in off-label use of certain medicines to treat COVID-19 pneumonia with the ongoing needs of members who use these drugs for chronic conditions. These medicines include hydroxychloroquine, azithromycin, one protease inhibitor and albuterol inhalers, which are approved for treatment of lupus, bacterial infections, HIV, rheumatoid arthritis and asthma. We believe these to have a positive impact on the company’s first-quarter pharmacy services business numbers.
Again, the company’s retail pharmacy services business is likely to have gained amid the pandemic as this segment is putting a lot of effort to meet the crisis. Realizing a huge ramp up in demand for the company’s services, in March, it announced plans to hire store associates, home delivery drivers, distribution center employees and member/customer service professionals. This should get reflected in the first-quarter top-line numbers.
During the first quarter, the company talked about providing COVID-19 diagnostic testing and telemedicine visits through the company’s outlets. The company’s Aetna health insurance arm within Health Care Benefits business offered zero co-pay telemedicine visits for any reason to all Individual and Group Medicare Advantage members. CVS Health waived off of cost sharing for all Teladoc virtual visits. We believe these initiatives to have worked in favor of CVS Health and added more Medicare Advantage members for Aetna. This should get reflected in the first-quarter results.
The Zacks Consensus Estimate for first-quarter adjusted EPS of $1.63 suggests a 0.6% rise from the year-ago reported figure. The consensus estimate for revenues is currently pegged at $63.07 billion, indicating 2.3% growth from the year-earlier reported number.
What the Quantitative Model Predicts
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has good chances of beating estimates. This is the case as you can see:
Earnings ESP: CVS Health has an Earnings ESP of +3.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CVS Health carries a Zacks Rank #3.
Other Stocks to Consider
Here are a few medical stocks from the same space with the right mix of elements to surpass expectations this earnings season.
Health Catalyst, Inc. (HCAT - Free Report) has a Zacks Rank #1 and an Earnings ESP of +27.59%.
Aphria Inc. , carrying a Zacks Rank of 2 at present, has an Earnings ESP of +35.71%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Shutterstock
What's in the Cards for CVS Health (CVS) in Q1 Earnings?
CVS Health Corporation (CVS - Free Report) is scheduled to report first-quarter 2020 results on May 6, before the opening bell.
In the last reported quarter, the company delivered a positive surprise of 2.98%. It beat earnings estimates in each of the trailing four quarters, the average being 6.53%.
Let’s take a look at how things have shaped up prior to this announcement.
Factors at Play
Shares of CVS Health have been on a declining trend since the beginning of February like most of the pharmacy benefits managers (PBM) as the coronavirus outbreak disrupted the market for non-COVID-19 and elective healthcare cases. Further, with office shutdowns and implementation of Stay-at-Home culture, walk-in-clinical appointments and patient visits were significantly lower in the last two months of the quarter. Hence, CVS Health, which has a huge PBM client base otherwise, is expected to have seen a significant decline in its quarterly revenues.
CVS Health Corporation Price and EPS Surprise
CVS Health Corporation price-eps-surprise | CVS Health Corporation Quote
However, during the first quarter, the company took several PBM business initiatives together with its clients to balance the burgeoning interest in off-label use of certain medicines to treat COVID-19 pneumonia with the ongoing needs of members who use these drugs for chronic conditions. These medicines include hydroxychloroquine, azithromycin, one protease inhibitor and albuterol inhalers, which are approved for treatment of lupus, bacterial infections, HIV, rheumatoid arthritis and asthma. We believe these to have a positive impact on the company’s first-quarter pharmacy services business numbers.
Again, the company’s retail pharmacy services business is likely to have gained amid the pandemic as this segment is putting a lot of effort to meet the crisis. Realizing a huge ramp up in demand for the company’s services, in March, it announced plans to hire store associates, home delivery drivers, distribution center employees and member/customer service professionals. This should get reflected in the first-quarter top-line numbers.
During the first quarter, the company talked about providing COVID-19 diagnostic testing and telemedicine visits through the company’s outlets. The company’s Aetna health insurance arm within Health Care Benefits business offered zero co-pay telemedicine visits for any reason to all Individual and Group Medicare Advantage members. CVS Health waived off of cost sharing for all Teladoc virtual visits. We believe these initiatives to have worked in favor of CVS Health and added more Medicare Advantage members for Aetna. This should get reflected in the first-quarter results.
The Zacks Consensus Estimate for first-quarter adjusted EPS of $1.63 suggests a 0.6% rise from the year-ago reported figure. The consensus estimate for revenues is currently pegged at $63.07 billion, indicating 2.3% growth from the year-earlier reported number.
What the Quantitative Model Predicts
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP has good chances of beating estimates. This is the case as you can see:
Earnings ESP: CVS Health has an Earnings ESP of +3.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CVS Health carries a Zacks Rank #3.
Other Stocks to Consider
Here are a few medical stocks from the same space with the right mix of elements to surpass expectations this earnings season.
Health Catalyst, Inc. (HCAT - Free Report) has a Zacks Rank #1 and an Earnings ESP of +27.59%.
Exact Sciences Corporation (EXAS - Free Report) has a Zacks Rank of 2 and an Earnings ESP of +2.28%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Aphria Inc. , carrying a Zacks Rank of 2 at present, has an Earnings ESP of +35.71%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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