CVS: Resets Long-Term Profit Growth Goals and Adjusts Business Models in Retail Pharmacy and PBM

Narrow-moat CVS Health reset its long-term profit growth goals at its investor day, which look more in line with our long-term expectations, and we are keeping our $103 fair value estimate intact, or well above where shares are trading. Instead of shooting for double-digit earnings growth, an industry standard in managed care, CVS now expects a more realistic floor of at least 6% growth in the long run. Additionally, CVS revealed new business models in its retail pharmacy and pharmacy benefit management businesses that could add more transparency to those highly scrutinized businesses.