The firm said it initiated coverage on the drugstore retail chain based on a valuation call.
"While we believe the company is on track to achieve the top end of its long term growth guidance and should benefit from its multi-channel business model, strong growth initiatives that are driving share gains, and industry tailwinds, we think much of this growth is reflected in the current stock price," Citigroup said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Shares of CVS Health are lower by 0.41% to $90.88 at the start of trading on Wednesday morning.
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, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 9.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.34, 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 0.66, displays a potential problem in covering short-term cash needs.
- Compared to its closing price of one year ago, CVS's share price has jumped by 35.87%, exceeding the performance of the broader market during that same time frame. 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.
- CVS HEALTH CORP's earnings per share declined by 20.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CVS HEALTH CORP increased its bottom line by earning $3.75 versus $3.03 in the prior year. This year, the market expects an improvement in earnings ($4.49 versus $3.75).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, CVS HEALTH CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CVS Ratings Report