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CVS Health Corp CVS

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

CVS Maintains 2020 Bottom-Line Outlook Despite COVID-19 Concerns; Shares Undervalued

Julie Utterback, CFA Senior Analyst

Analyst Note

| Julie Utterback, CFA |

Narrow-moat CVS Health turned in first-quarter operating results that significantly beat expectations, due to a surge of activity in its stores and PBM related to shelter-in-place orders that began in mid-March. Joining the other four managed care organizations that we cover, CVS management has maintained its 2020 EPS guidance, suggesting the pullback in its retail stores, in particular, following initial stocking activities in March should not trip up the rest of 2020. We are maintaining our fair value estimate for CVS and still view shares as significantly undervalued.

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Company Profile

Business Description

CVS Health Corp provides an even more integrated healthcare-services offering for its members. Legacy CVS combined both the largest pharmacy benefit manager, processing about 2 billion adjusted claims annually, and a sizable pharmacy operation, including nearly 10,000 retail pharmacy locations primarily in the U.S. Adding a managed-care organization with about 23 million medical members gives the company a strong position in the insurance industry and should help CVS better control overall healthcare costs for its clients.

Contact
One CVS Drive
Woonsocket, RI, 02895
T +1 401 765-1500
Sector Healthcare
Industry Healthcare Plans
Most Recent Earnings Mar 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type High Yield
Employees 290,000

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