The Ratings Game: CVS says it will reach millions of new customers as it administers COVID vaccine

The Ratings Game: CVS says it will reach millions of new customers as it administers COVID vaccine

2021-02-23 20:57:00

CVS Health Inc.

looks forward to the opportunity to meet tons of new customers over the next few months as they administer the COVID-19 vaccine, giving the pharmacy retailer a unique business opportunity.

According to CVS CEO Karen Lynch, CVS has provided COVID-19 testing, with approximately 15 million tests conducted at its 4,800 locations across the country.

The pharmacy retailer has also launched a program, Return Ready, designed to help businesses and universities prepare for the return of workers and students, with 100 registered customers.

The federal government chose CFS to administer COVID vaccines to long-term care facilities, delivering more than three million doses to patients and employees. In mid-March, CVS says it will have administered both doses of the vaccine in assisted living facilities.

See: Walgreens and CVS are looking for 35,000 jobs to roll out the COVID-19 vaccine

As part of President Joseph Biden's COVID vaccination plan, CFS will administer 250,000 COVID immunizations in 11 states.

"Millions of new customers will interact with CVS Health for the first time through testing and vaccine administration services," Lynch said during last week's earnings call, FactSet said.

"It will create the opportunity to expand our customer base while deepening relationships with current customers."

Truistic analysts say there are a few factors that allow CVS to make a profit, including “market pressure, increasing patient consumerism, and increased demand for
decentralized care. "Expanding access to low-cost care via MinuteClinic and expanding the virtual care offering are just a few examples.

“The company's meaningful COVID test / vaccine response provides
additional patient connectivity (most sign up digitally), broadening the playing field for new customers and we see the potential for additional acceleration as vaccine distribution continues to expand, ”said David MacDonald.

Truist rates CVS stock buyback with a target price of $ 80.

Also: "Devastating" milestone: US approaching 500,000 COVID-19 deaths

Even with all the interaction, CVS says that COVID-19 is "expected to have an intangible impact" on adjusted earnings per share for 2021.

CVS reported a decline in fourth-quarter earnings per share and adjusted earnings per share, although the results beat FactSet's consensus. Higher earnings also surpassed FactSet's consensus.

"COVID-19 is expected to benefit the retail / long-term care segment and have an unfavorable temporary impact on the healthcare benefits segment," Eva Boratto, CVS chief financial officer, said during the earnings call.

JPMorgan analysts note that COVID-19 delivered net adjusted earnings per share of 25 cents per share in 2020.

Within the retail / long-term care segment in 4Q, the company pointed to lower pharmacy volumes due to a reduction in new therapy prescriptions, including fewer seasonal flu prescriptions, less retail traffic and volume due to a lower cough / cold / flu season, incremental pre-vaccine costs. , and benefits of diagnostic testing, ”said analysts.

Still, JPMorgan believes the company is well positioned for a future with new reimbursement models, the "retailization" of healthcare and the need for cost cutting.

“We continue to believe that the ability to use medical, pharmacy and laboratory data to target interventions, improve member engagement to drive behavioral change and drive care to lower-cost settings will lead to better quality of care, better results and lower general health care costs will ultimately drive earnings growth, ”said analysts.

JPMorgan rates CVS stock as overweight with a price target of $ 102.

Watch: How telecare could become a $ 175 billion market in the next 5 years

Mizuho analysts are also optimistic about the increasingly diverse nature of CVS's business. In addition, colds and flu should return as the COVID pandemic comes to an end.

"The weak cold / flu season is expected to continue in 1Q: 21 and probably 4Q: 21," Mizuho said. "We see this as a temporary problem that should normalize by 2022."

Mizuho assesses the purchase of CVS stock with a target price of $ 82.

CVS shares are up 4.2% in the last three months, but are down 2.7% in the last year. The benchmark S&P 500 index
+ 0.12%

is up 16.3% in the last 12 months.

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