CVS Health Corporation: Bulls continue to charge

Written by Dennis Mwenga

CVS Health Corporation (#CVS) is America’s second largest healthcare plan  provider. It is ranked 4th on the Fortune 500 list and 7th on the Fortune Global 500 list, with a market capitalization of $144.43 billion CVS Corp is expected to announce its fourth quarter 2021 financial results and business outlook on Wednesday 9th February, 2022 before the market opens.

The report will be for the fiscal quarter ending Dec 2021. In the fiscal third quarter of 2021 which ended on 30th September 2021 and reported on 3rd of November 2021, the company’s revenue was 73.55 billion dollars and the net income was 1.60 billion dollars (30.56% higher on a year on year basis) also in the same period, while the earnings per share stood at $1.97, surpassing analysts’ forecasts of $1.79These figures were clearly higher than the ones for the same period in 2020 (revenue 66.85 billion dollars; net income of 1.22 billion dollars; earnings per share $0.93).

At the moment according to a Yahoo Finance survey of 22 analysts, the forecasted earnings average estimate is 1.83 per share and average revenue is estimated to come in at 75.55 billion dollars according to 19 analysts surveyed. Also, according to Zacks Investment Research, based on 7 analysts’ forecasts, the consensus EPS forecast for the quarter is $1.94. It is important to note that CVS Corp pays an annual dividend of $2.20 (that’s a yield of 2.03%) and the total shareholder return for the past 12 months is 54.76%.

According to new CVS CEO Karen Lynch, in 2023 CVS wants to turn itself into a healthcare destination by adding more medical professionals, diagnostic tests and primary care to its stores. “It will achieve this by rolling out a new store format called a HealthHub weaving together different pieces of its business therefore investors probably anticipate a sales growth acceleration as it offers more services at drugstores and customers’ homes to make health care more affordable and convenient’’. Investors will pay attention as to whether CVS Corp will maintain its momentum from the previous quarter.

The CVS stock price rose by more than 54% in the past 12 months and the stock posted a 52-week high last week, just $5 short of its all-time high posted in 2015 at $113.65. CVS Corp price action continues to charge higher on the daily timeframe chart and is trending upwards above the 50 (blue), 20 (red) and 200 (black) simple moving average having come off last month’s swing low at $99.69 which was the bottom of a 4-week bull flag chart pattern. The ADX is above 25.00, clearly indicating that the stock price is in a strong uptrend. Currently, the stock price is targeting the first fib expansion at 61.8 that is at $111.90. A firmer downside target can be anticipated at 20MA and 50MA and also at $105.05 which was a key swing low at the beginning of this month.

About the author

Dennis Mwenga

Dennis Mwenga has worked as an independent trader and educator since 2016. His love for the global financial markets grew as a result of his Bachelor of Laws degree and specialization in commercial law and international trade, which drove him to pursue the Chartered Market Technician (I) program in order to build skills for better investment decisions. As a devoted educator, he was encouraged to contribute to an educational series called 222 Days of Foreign Exchange Trading and later co-author a book on the subject, which drove him to seek a career as a mechanical and automated trading systems trainer. He has also organized and hosted financial markets trading educational podcasts and webinar series, in which he interviewed renowned traders, trading mentors, and fund managers with decades of expertise trading a variety of assets in the financial markets.