CVS opened the year on 1/4/16 at $96.06 and closed out the
quarter on 3/31/2016 at a price of $103.73, representing a 7.98% gain. With a
price target of $126.47, 24.72% upside still remains. Since buying in at
$91.66, CVS has provided us with captain gains yield of 12.76%. On 1/20/2016 a
0.425 dividend was paid out.
CVS has a P/E ratio of 19.8 as of 3/31/2016, which is in
line with the S&P 500 average. One
key multiple that shows CVS is undervalued compared to its peers is their P/S
ratio. CVS has a P/S ratio of 0.62 as of 3/31/2016 compared to the S&P 500
average of 1.7. With expected revenue growth of 10% supported by recent
acquisitions of Target pharmacies, CVS is putting itself in a phenomenal
position to be successful.
CVS reported fourth quarter earnings on February 9th
2016. CVS reported strong fourth quarter profit growth with an adequate end to
a phenomenal year-end 2015. CVS is continuing to grow through the acquisitions
of Target pharmacies and Omnicare, a leader in long-term care pharmacy. The
integration activities with target are under way and already stores have been
transformed. Conversions in the next quarter will continue to increase and
should be completed by the end of FY 2016.
With conversions to be completed by the end of FY 2017,
there is huge potential for an increase in the revenue stream once the new CVS
pharmacies within target see the market. CVS is a great long-term value stock
that I believe will continue be the backbone of our healthcare holdings.
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