Alexander MacDonald Portfolio managerCVS Health CorpCVSWATCHAug 14, 2023

Bought at less than 10x earnings with recent dividend increase is good for share price appreciation. Recent M&A also good for investors. Will continue to own shares. Excellent management team and solid dividend. Weakness is sector creating opportunities to buyout competitors. 

Price target was raised today. This peaked in 2020-1 then was hit with a lot of bad news, like doubts over Signify and Oak Street acquisitions. But that negative sentiment has reversed, like their Medicare Advantage stars rating has gone up, and the street sees profitability rising in their pharmacy benefits management system, based on a new model last month. Trades under a cheap PE and pays a 3% dividend. He targets over $100 in 12 months. Is underloved and over-owned.

They just had a good investor day. If this breaks $76, it will rocket.

Retail pharmacy chain business very strong. Largest health insurance plan very good business. Things stock is under valued. P/E lower than peers. Would recommend watching. Not buying at this time. Scored 8/10 on fundamentals. Expecting 30% upside. Good if recession occurs. 

Healthcare has lagged this year. They run a chain of pharmacies, Aetna health insurance, pharmacy management and recently bought Oak Health. The CEO is doing a great job, and shares are not expensive around 8.5x PE. They took one some debt to bought some companies, but once they integrated them, it will ramp up cash flow.

Like many retailers, they struggle with theft. Home healthcare at these US chains was supposed to prosper, but it didn't. Low margins and low barriers to entry.

It is so large now and a conglomerate with many divisions. The big pharmacies like Walgreen and CVS are in some difficulty and staffs are worn out. There are better opportunities elsewhere.

Very large acquisition in health clinics. Pharmacy side of business struggling. Becoming a major healthcare provider in USA. Trading at 8x earnings. Cash flow excellent. Good for long term investors. Will continue to hold. Strong management team. 

Likes their diversity within US healthcare: insurance, pharmacy benefits and of course drug stores. They bought Signify and Oak Street which will be additive. CVS will definitely perform. Trades at a very low PE of under 8x and produces a ton of cash. Be patient with CVS.

Insider selling earlier this year. One of its insurers pulled back on commitments. Very strong brand in the US, one of the largest, which puts a moat around it. Aging population will need more healthcare. Too cheap to ignore right now.

Diversified into a vertically integrated healthcare colossus. Aetna business is weighing them down, but could be temporary. Compelling 8x earnings, very cheap, well capitalized, nice dividend. As long as Americans need healthcare, CVS will be part of that.

They can't control their theft problem.

Very positive on company.
Integrated healthcare company.
Demand for healthcare rising steadily.
Current share price under valued.
Good for long term investors.
Untapped franchise potential.
Expecting 10-12% share price growth.