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No. of Recommendations: 1
Opinion of CFRA analyst:

09/17/20 9:20 am ET... CFRA Reiterates Strong Buy Opinion on Shares of CVS Health Corporation (CVS 57.48 *****) : We maintain our target price of $79 and our Strong Buy opinion on shares of CVS. Shares of CVS have significantly underperformed both the S&P 500 Health Care and S&P 1500 Health Care Providers& Services indices, which is quite baffling to us because CVS is clearly continuing to execute well on its transformation efforts despite the pandemic. We think that the company’s long-term EPS growth trajectory has been minimally impacted by Covid-19. In fact,the pandemic might accelerate secular trends that are shifting the provision of health care away from hospitals and towards more decentralized settings. Given that CVS is trading at 7.5x our 2021EPS estimate, we feel that CVS’s value proposition is broadly being overlooked by investors in the recent environment in which growth stocks have received much more investor interest, possibly because of the complexity of CVS’s businesses and how the pandemic uniquely affects each one of them.. /Kevin Huang, CFA

Opinion of Morningstar analyst:

Julie Utterback, Sr. Eq. Analyst, 09 August 2020Our fair value estimate for CVS remains $92 per share,which implies a 13 times multiple on 2020 expected earnings.We expect CVS' pro forma revenue, operating profit, and adjusted earnings per share to grow about 3%, 7, and 8%,respectively, on a compound annual basis from 2019 to2024. Investors should note that, after relatively flat earnings since 2018, CVS aims to accelerate its bottom-line growth to the low double digits by 2022through its various cost-saving programs, lower interest expense after debt repayment, share repurchases, and synergies between its newly combined operations. Our valuation implies a similar acceleration of earnings growth during that period, including some margin expansion through 2024. Also, we expect roughly mid-single-digit earnings growth in the outer years of our10-year forecast, including potential repurchases.
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