CVS remains a solid buy for the short and long term, despite Florida case settlement.
Analysts are bullish about the prospects of CVS Health Corp (NYSE:CVS), both long term and short term is the main frontline player in Obamacare, providing and dispensing prescriptions, as well as offering over-the-counter medicines, on top of cosmetics and other general store merchandise available like any other ordinary retail store.
It is little wonder that CVS is reaping what the Obamacare has sown. With less than 8000 pharmacies available throughout the US helping the company to gain and have access to its over 65 million members, there is still room for growth though, with a large number of potential 60-plus patients who can join the ranks of having unfettered access to CVS health care and pharmacy services. However, that is only possible if the company plays it cards right.
In addition, the company possesses 900 'Minute Clinic' concept outlets located in more than 30 states and Washington DC, which attends around 24 million patient visits, with many of them returning with a 95% satisfactory rating. All of this is led by the 'Affordable HealthCare Act', which has influenced more people to get them insured.
There is definitely a lot of money involved to make in pharmacy stores these days. The drugstore business market in the US is estimated at $250 billion, and growth rate is more than 2% annually, providing huge opportunities to retail pharmacies, as well as CVS Health Corp to grab a huge slice of the market, if Obamacare does not face many challenges.
Adding further evidence of CVS's strengthening credentials is the fact that the company is growing faster than average, at least financially. Quarterly revenue is up by 11%, and beating earnings per share at $1.14, past analysts' estimates of $1.08. Overall, revenues from the CVS Health's Pharmacy Services grew more than 18% and Retail Pharmacy at less than 3%. All of this is a result of expanding sales and new store openings (CVS opened 38 stores this year, surpassing expectations).
Adding 'sour' to these positive fundamentals is that the company has agreed to pay $22 million to settle with the federal government over the misuse of addictive prescribed pain killers in Florida, with the latter suggesting that the former was aware of its happenings. The settlement resolves all civil matters between CVS and the U.S. Drug Enforcement Administration and state of Florida.
CVS Health Corp's stock price ended the day at $99.81, a drop of 0.43% from the previous day.