CVS made the deal to keep up with Walgreens, Cigna, and UnitedHealth in adding primary care services to offset the eroding insurance business. The problem is that Oak Street has been losing money, and a turnaround is not expected just because the operations will get a new owner.
Analysts remain bullish on the stock, with 19 of 26 brokerages having a Buy or Strong Buy rating. The rest rate it at Hold. At a share price of around $73.50, the stock’s upside potential based on a median price target of $110.00 is about 79.7%. At the high price target of $143.00, the implied upside is 94.6%.
The consensus revenue estimate for the third quarter is $80.84 billion, down 3.6% sequentially but 5.2% higher year over year. Adjusted EPS are forecast at $2.09, up 5.2% sequentially and down 5.9% year over year. For the full 2023 fiscal year, analysts are looking for EPS of $8.77, up 0.9%, and revenue of $334.1 billion, up about 3.6% year over year.
CVS stock trades at 8.4 times expected 2023 EPS, 8.1 times estimated 2024 earnings of $9.07 and 7.4 times estimated 2025 earnings of $9.87 per share. The stock’s 52-week range is $71.94 to $107.26. CVS Health pays an annual dividend of $2.42 (yield of 3.3%). Total shareholder return for the past 12 months was negative 21.53%.
Kraft Heinz
Shares of Kraft Heinz Co. (NASDAQ: KHC) have retreated by 9.5% over the past 12 months. For the year to date, shares are down just over 3%. A solid dividend and payout ratio of 83% explains why more than 80% of the stock is held by institutional investors. Earnings guidance was below expectations when the company reported fourth-quarter results in February. The company also said it was going to stop raising prices for the rest of the year in North America, Europe, Latin America and most of Asia. Investors are going to want to see how that is working out.
Analysts, who typically focus more on growth than dividends, are mixed on the company. Of 21 brokerages covering the stock, 12 have Hold ratings and eight have a Buy or Strong Buy rating. At a share price of around $40.00, the upside potential based on a median price target of $44.00 is 10%. At the high price target of $52.00, the upside potential is 30%. The targets and medians have not changed since February.
Kraft Heinz is expected to post first-quarter revenue of $6.39 billion, down 13.4% sequentially and up 5.8% year over year. Adjusted EPS are forecast at $0.60, down almost 30% sequentially and flat year over year. For the full 2023 fiscal year, analysts are looking for EPS of $2.72, down 2% year over year, on revenue of $26.98 billion, up by 1.9%.
The company’s stock trades at 14.6 times expected 2023 EPS, 3.8 times estimated 2024 earnings of $2.89 and 13.0 times estimated 2025 earnings of $3.05 per share. The stock’s 52-week range is $32.73 to $44.87. Kraft Heinz pays an annual dividend of $1.60 (yield of 4.07%). Total shareholder return for the past 12 months was negative 2.87%.
Originally published at 24/7 Wall St.
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