CVS Health Corporation Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

There's been a notable change in appetite for CVS Health Corporation (NYSE:CVS) shares in the week since its first-quarter report, with the stock down 18% to US$55.15. Statutory earnings per share fell badly short of expectations, coming in at US$0.88, some 33% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$88b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on CVS Health after the latest results.

See our latest analysis for CVS Health

Taking into account the latest results, the consensus forecast from CVS Health's 24 analysts is for revenues of US$369.2b in 2024. This reflects a modest 2.7% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be US$5.91, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$370.8b and earnings per share (EPS) of US$6.87 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

It might be a surprise to learn that the consensus price target fell 15% to US$74.93, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values CVS Health at US$101 per share, while the most bearish prices it at US$60.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that CVS Health's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.6% growth on an annualised basis. This is compared to a historical growth rate of 9.3% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CVS Health.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that CVS Health's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for CVS Health going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for CVS Health (1 is significant!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.