The analyst firm raised its 2016 EPS estimates for the drug store operator to $6.17 a share from its previous estimate of $6.04 a share.
Deutsche Bank analysts George Hill and Stephen Hagen said the higher numbers come from their updated model for the company which includes the acquisitions of Omnicare (OCR) and more than 1,600 Target (TGT) - Get Target Corporation Report pharmacies. The analysts expect the acquisitions to close at the end of 2015, and to add $11 billion to their 2016 revenue forecast for CVS.
"CVS guided for 10c accretion from the Target acquisition in 2017 and greater than 12c in 2018," the analysts wrote. "We believe the combination of higher Revenue/Rx and higher profitability at CVS pharmacies in Target stores could drive accretion above this guidance."
Separately, TheStreet Ratings team rates CVS HEALTH CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate CVS HEALTH CORP (CVS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.7%. Since the same quarter one year prior, revenues rose by 11.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CVS HEALTH CORP has improved earnings per share by 12.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CVS HEALTH CORP increased its bottom line by earning $3.96 versus $3.75 in the prior year. This year, the market expects an improvement in earnings ($5.17 versus $3.96).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Food & Staples Retailing industry average. The net income increased by 8.1% when compared to the same quarter one year prior, going from $1,129.00 million to $1,221.00 million.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 43.50% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that CVS's debt-to-equity ratio is low, the quick ratio, which is currently 0.60, displays a potential problem in covering short-term cash needs.
- You can view the full analysis from the report here: CVS Ratings Report