Earnings Beat: CVS Health Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Shareholders will be ecstatic, with their stake up 22% over the past week following CVS Health Corporation's (NYSE:CVS) latest full-year results. It looks like a credible result overall - although revenues of US$371b were what the analysts expected, CVS Health surprised by delivering a (statutory) profit of US$3.66 per share, an impressive 20% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for CVS Health

Taking into account the latest results, the most recent consensus for CVS Health from 24 analysts is for revenues of US$387.4b in 2025. If met, it would imply a satisfactory 4.5% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 23% to US$4.49. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$386.4b and earnings per share (EPS) of US$4.74 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 7.3% to US$70.38, suggesting that these impacts are not expected to weigh on the stock's value in the long term. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values CVS Health at US$91.43 per share, while the most bearish prices it at US$48.01. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that CVS Health's revenue growth is expected to slow, with the forecast 4.5% annualised growth rate until the end of 2025 being well below the historical 8.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.2% annually. 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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for CVS Health going out to 2027, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with CVS Health (including 1 which is concerning) .

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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.