Prudena about CVS Health

CVS (NYSE: CVS) reported Q2 2015 earnings on August 4, recording adjusted EPS of $1.22 on $37.2 billion in revenues. Analysts had been expecting EPS of $1.20 and revenue of $37.18 billion. Compared to the prior year, EPS grew $0.06 and revenue increased 7.4%. The company also narrowed its earnings guidance range. Analyst opinion remains strong, with 22 of 25 analysts recommending buy or better, according to Yahoo Finance. Shares are $5 below recent highs but have appreciated more than 12% YTD.

Prudena's models indicate that CVS is slightly overvalued, assuming analyst estimates. Analyst forecasts are bullish relative to recent organic growth rates, though demographic trends and consumer taste trends both function as catalysts in the medium term. Should CVS fail to meet earnings growth expectations due to competitive conditions or deterioration of macro conditions, residual earnings models will indicate that shares are even more overvalued.