CVS - Overreaction or Justified Selloff?

Noah Kiedrowski - Contributor - Biotech


CVS Health (NYSE:CVS) recently reported what was ostensibly another great quarter reporting a year-over-year increase of 28% and 16% in EPS and revenue, respectively. After reporting its Q3 earnings, CVS sold off 17%, moving down from $84 to $70 at market open. I’ve written several articles putting forth the case that CVS presents a compelling investment opportunity in the growing healthcare space. My investment thesis was based on the fact that CVS has been highly acquisitive, continues to deliver robust earnings growth, revenue growth, growing dividends and has an aggressive share buyback program in place. With its recent acquisitions of Target’s pharmacies and Omnicare, these proactive measures will significantly expand its presence and ability to dispense prescriptions to the general public and in long-term care facilities. As healthcare costs and prescription drug costs continue to rise and the population continues to age with the elderly comprising a larger segment of the overall population, CVS looked poised to benefit. Recent marketplace trends have forced CVS to cut guidance for Q4 2016 and the full-year 2017 numbers. Given this dichotomy between the company’s historically strong fundamentals and share price, was this an overreaction or was the selloff justified? Continue reading "CVS - Overreaction or Justified Selloff?"