CVS Health Corporation (NYSE:CVS) came out with its annual results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues of US$357b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at US$6.47, missing estimates by 3.3%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from CVS Health's 20 analysts is for revenues of US$368.4b in 2024. This would reflect a reasonable 3.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 5.5% to US$6.99. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$361.4b and earnings per share (EPS) of US$7.47 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
The consensus price target held steady at US$89.58, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on CVS Health, with the most bullish analyst valuing it at US$104 and the most bearish at US$77.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that CVS Health's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2024 being well below the historical 9.9% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.3% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CVS Health.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CVS Health. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for CVS Health going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for CVS Health that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.