Shares were down slightly Wednesday at $53.61.
In a note to investors previewing the healthcare services sector's first quarter, analyst David MacDonald said he expects a challenging year for the Woonsocket, Rhode Island-based company, but pointed to "a unique collection of assets." He said he expected CVS's first-quarter results to reflect a handful of challenges, including reimbursement pressure, fewer generics, lower brand inflation.
"While 2019 is expected to be difficult," MacDonald wrote, "we remain positive on CVS' underlying value proposition tied to its integrated pharmacy/medical benefits, unique set of assets, meaningful patient touch points, and strong clinical programs, and view the company as well positioned to bend the cost curve over time.
"We also expect strong Medicare Advantage growth and expect the Healthcare Benefits division to benefit as acquisition synergies are
realized. While we expect 2019 performance to remain choppy, we continue to like the risk/reward, given the meaningful expected cost savings benefits, strong cash flow generation and discounted valuation.
Last week, a federal judge said he wanted to hear in court from witnesses who objected to the Justice Department's decision last year to approve CVS's nearly $70 billion acquisition of Aetna.
U.S. District Judge Richard Leon in Washington is reviewing a department settlement last fall that allowed the merger after the companies agreed to sell off assets related to Medicare drug coverage. Leon said during a hearing that "this is a matter of great consequence to a lot of people."
CVS last released earnings on Feb. 20. The pharmacy operator reported earnings of $2.14 a share, beating analysts' consensus estimates of $2.07.