CVS Health - Analysts see an average upside of 22% with a low forecast of at least 8% in 2024

Overview

CVS Health is an American healthcare firm that owns the retail drugstore chain CVS Pharmacy, the pharmacy benefits manager CVS Caremark, and the health insurance company Aetna. It is the biggest healthcare firm in the world.

Technical Outlook

Taking a look at CVS on a longer-term outlook, the duration being between 6-12 months. Currently, its stock is trading at around $74.19 a share and we can see from a technical aspect that the price tried to move above the 50-day moving average, but it was rejected by the resistance. The stock has found key support along the 200MA around $64.40 and $66.60, which was just before the end of year rally. Looking at the history of the chart, when the price has reached the 200MA it was followed by a bounce. Once in 2019 and twice in 2020. We can also see that in both 2019 and 2020 when the price approached the 50MA it was rejected, leading to a pullback before moving higher. We can see that so far a similar scenario is playing out, it is not guaranteed that history will repeat itself as this is simply just based on technical analysis. However, a clear break and close above the 50MA would signal bullish momentum, potentially leading to a rally similar to March of 2021. The main resistance in focus right now is $83.23. Looking at the MACD, it is now on a small rise after potentially finding a bottom in November. Again, if we look at the years 2018 and 2019, when the MACD turned from flat to rising the stock gained momentum leading to a 28% rise in 2018 and a 40% rise in 2019.

Forecast & Valuation

The average analyst 12-month forecast for CVS is $90.53, meaning a 22% upside potential with a low estimate of $80. An $80 low forecast still offers 8% to the upside.

CVS has a $95.47bn market cap with an annual revenue of $356.6bn, it could be argued that that stock is slightly undervalued by the market. Additionally, the P/E ratio sits at roughly 11.3x with a dividend yield of 3.6%.

Some Key Points:

• Management has been buying back shares
• Net income is expected to grow in 2024
• Stock tends to have low volatility
• Analysts forecast that the firm will be profitable in 2024
• Short-term obligations surpass liquid assets