CVS Stock Trades Higher Following Guidance Hike: What Investors Need To Know

CVS Health Corp CVS shares traded higher Thursday after the company raised its fiscal 2022 financial guidance ahead of its upcoming investor day event.

One analyst said the new outlook is encouraging for CVS investors, and the company has plenty of momentum heading into 2022.

The CVS Analyst: Bank of America analyst Michael Cherny reiterated his Buy rating and $112 price target for CVS.

Related Link: CVS Plans 900 Store Closures Over Three Years

The CVS Thesis: CVS has raised its fiscal 2021 EPS guidance from a range of between $7.90 and $8 to “at least $8.” The drug store chain also issued 2022 EPS guidance of between $8.10 and $8.30, above Bank of America’s estimate of $8.05 and roughly in-line with consensus analyst estimates of $8.22.

CVS also said it is targeting a return to at least 10% annual EPS growth starting in 2024.

In addition, CVS announced a $10-billion share buyback program and raised its dividend by 10% to $2.20. The new dividend represents a yield of nearly 2.3%.

Cherny said the updated guidance is bullish for CVS investors and suggests the company is on the right track heading into 2022.

“We view these targets as a strong start to the investor day, with the focus from here being on the how that the company works through to get towards all of these various metrics,” Cherny wrote.

He said the stock trades at an attractive valuation of less than 11 times projected 2022 earnings.

Benzinga’s Take: It appears CVS is firing on all cylinders based on its latest guidance. The stock has been a strong performer in 2021, and it may be in for a repeat performance in 2022 if it can hit its financial targets.