CVS

CVS Health Corp

Consumer, Healthcare


Presented:09/26/2017
Price:$81.65
Cap:$83.61B
Current Price:$65.00
Cap:$81.77B

Presented

Date09/26/2017
Price$81.65
Market Cap$83.61B
Ent Value$106.99B
P/E Ratio16.3x
Book Value$33.64
Div Yield2.45%
Shares O/S1,024.00M
Ave Daily Vol5,051,747
Short Int2.58%

Current

Price$65.00
Market Cap$81.77B
CVS Health Corp. engages in the provision of health care services. It operates trough the following segments: Pharmacy Services, Retail or Long Term Care, and Corporate. The Pharmacy Services segment offers pharmacy benefit management solutions. The Retail or Long Term Care segment includes selling of prescription drugs and assortment of general merchandise. The Corporate segment involves in providing management and administrative services. The company was founded by Stanley P. Goldstein and Ralph Hoagland in 1963 and is headquartered in Woonsocket, RI.

Publicly traded companies mentioned herein: Aetna Inc (AET), Amazon.com Inc (AMZN), CVS Health Corp (CVS), Kroger Co (KR), Target Corporation (TGT), Walgreens Boots Alliance Inc (WBA)

Highlights

Shares of CVS Health (CVS) have been trading in the $75-85 range for roughly the last 12 months, and at $82 the presenter is short the stock. He believes guidance will “come in light” at the Analyst Day, which is scheduled for December 12, 2017; with the Street modeling a return to high single-digit (8.5%) EPS growth in 2018 year-over-year, upside should be limited. On the downside, a base case price target in the low $70s over the next 12 months, based on an 8x EBITDA multiple (vs 8.5x today), is “OK, but not great (12-13% downside is fine)”; but optionality around Amazon’s seemingly inevitable entrance into the industry makes the bear case much more compelling/ exciting.

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Idea Discussion

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