CVS Health (NYSE: CVS) The results for the third quarter of 2022 are due to be announced on Wednesday, November 2. We expect CVS stock to decline following the results announcement, with third-quarter revenue and earnings likely to fall below agreed estimates, primarily impacted by higher costs and a lower contribution from the Covid-19 vaccine. Although we expect CVS to report pessimism in the third quarter, we find CVS inventory to be undervalued, as shown below. The interactive dashboard analysis has been run CVS Health Earnings Preview Additional details.

(1) Revenue is expected to be slightly lower than consensus estimates

  • Trefis estimates CVS revenue for the third quarter of 2022 at approximately $76.7 billion, reflecting 4% year-over-year growth, and compared to a consensus estimate of $76.8 billion.
  • While CVS Covid-19 vaccine and testing led to its revenue growth in 2021, its contribution is expected to be significantly lower this year.
  • However, CVS should benefit from the continued rise in total medical membership.
  • Looking back at the second quarter of 2022, CVS reported an 11% year-over-year increase in sales to $80.6 billion, driven by higher revenue from retail, pharmacy and healthcare benefits.
  • Our dashboard is on CVS Health revenue Provides more details about the company’s segments.

(2) EPS is likely to be lower than consensus estimates

  • CVS’s third-quarter 2022 adjusted earnings per share are expected to be $1.95 per Trefis analysis, below the consensus estimate of $1.99. This compares with the $1.97 figure the company announced in the previous quarter.
  • CVS’s adjusted net income of $3.2 billion in the second quarter of 2022 reflects a modest 1% year-over-year decline, as higher revenue was offset by a 76 basis point decline in operating margin.
  • For the full year 2022, we expect adjusted EPS to be $8.40 in line with the level seen in 2021.

  • We appreciate CVS Health Evaluation To be $125, 33% above the current market price of $94.
  • This represents a 15x P/E multiplier based on forecast earnings per share of $8.40 in 2022.
  • At current levels, CVS stock is trading at 11x its expected future earnings, compared to the 12x seen in late 2021.
  • We have set a slightly higher multiplier, and we expect strong earnings growth over the coming years.
  • Furthermore, if the company reports upbeat third-quarter results and provides better guidance than Street estimates, the P/E ratio will likely be revised upwards, leading to higher CVS stock levels.

While CVS stock appears to be undervalued, it is useful to know how to do it CVS Health Peers Fare on important metrics. You’ll find other valuable comparisons of companies across industries at Peer comparisons.

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