CVS Health’s Guidance Mixed as Third-Quarter Revenue Tops Views

Valero Energy Corporation, stated net income from ongoing operations attributable to Valero stockholders of $1.4 billion, or $2.79 per share, in the third quarter of 2015 contrast to $1.1 billion, or $2.00 per share, in the third quarter of 2014. The adjustment considers the inclusion of Omnicare’s operations in the mid of the third quarter, almost offsetting the dilution from the Jul 2015 debt financing.

Without this adjustment, adjusted EPS would have come to $1.29.

Company’s net earnings assigned to common stockholders increased to $67.two million, or 81 cents for each share, within the third quarter from $48.1 million, or 57 cents for each share, last year.

At the end of Wednesday’s trade, CVS Health Corp (NYSE:CVS)’s shares dipped -1.40% to $103.82.

Last quarter, CVS Health posted a positive earnings surprise of 1.67%.

The company said revenue for the quarter rose 10.3% to $38.64 billion. This year-over-year improvement came primarily on the back of balanced growth in both Pharmacy Services and Retail Pharmacy segments.

Revenues in the pharmacy segment increased by 13.3% to $25.5 billion. CVS attributed the volume growth to new business and growth in Managed Medicaid service.

The stock had changed -0.01% since market close yesterday.

Contracts on the Standard & Poors 500 Index expiring in December rose 0.1 percent to 2,084.5 at 6:20 a.m.in New York, after earlier rising as much as 0.6 percent.

Front-of-store same-store sales declined 5.8%.

“While no one can complain about a US$100 billion behemoth growing EPS 10-14 percent in a challenging environment, expects were clearly somewhat higher given the M&A activity in 2015”, Evercore ISI analyst Ross Muken wrote in a note. Total operating margin during the quarter contracted 38 bps to 6% due to a 2.6% increase in operating costs. Plus CVS has been doing a few shopping of its own. Further, the company relocated 11 retail drugstores.

CVS Health runs 7,911 drugstores in 44 states, the District of Columbia and Brazil.

FactSet says analysts expect $5.16 per share, on average.

-EPS (Q3): $1.28 vs. $1.15 past year.

For 2016, CVS forecast earnings of $5.68 to $5.88 a share, below the $6.02 a share analysts polled by Thomson Reuters had forecast. According to the company, with increasing brand prices and accelerating growth in specialty, more clients are welcoming CVS Health’s product offerings.

And its recent acquisition of prescription-drug fulfillment company Omnicare Inc. greatly expands its pharmacy services and gives it greater clout in its dealings with pharmaceutical companies. Moreover, investors are looking forward to the company’s impending $1.9 billion takeover of retail giant Target’s TGT pharmacy and clinic businesses.

CVS Health Corporation, together with its auxiliaries, is a pharmacy company. A few other top-ranked stocks in the retail drugstore sector are BioScrip, Inc.

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