Opinions Jim Cramer - Mad Money
CVS Health CorpCVSDON'T BUYDec 20, 2024
Jim Cramer - Mad MoneyStock price when the opinion was issued
As of Jun 09, 2026. Market Open.
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About 22% upside to analysts' price target. Trending sideways. Looks cheap on the surface, but cheap for a reason. Be cautious until we see the full turnaround. Less visibility quarter to quarter.
In the space, she owns ABBV, MRK, TMO, and ABT. These higher-quality names have more growth and less execution risk.
It reports on Tuesday. Is more of a managed care company than a drug company. The stock got hammered after Washington said it would barely raise Medicare rates this year, a disaster for health insurers. That said, the CEO has done a great job. Is the last national drug store chain. Is worth considering.
CVS is a cheaper way to play the private benefits market, so he added that recently and it offers a better valuation than UNH.
John Zechner
Was down 43% in 2024, led by their managed care business, to be one of the worst stocks of 2024. But that business is now finally turning around, +12% in revenues in Q2 YOY, and revenues beating the street. So, the health insurance side is doing much better. They raised revenue guidance and full-year earnings. Firing on nearly all cylinders: drug store, pharmacy benefits, health service division (including in-store medical clinics) saw 10.2% revenue growth. Also, the front-of-store and pharmacy delivered a strong revenue beat and growing 12.5% YOY as competitors have vanished (i.e. RiteAid). Pharmacy sales were +18% YOY. CVS shares are up 58% this year and trades at only 11x PE and pays a 3.7% dividend. The CEO has done a remarkable job this year. Has more room to run.
Is up 50.5% this year, benfitting from chief rival Walgreens are going private, and CVS' managed care business, Aetna, is putting up better numbers. CVS got too cheap last year, but mounted a comeback after hiring a new CEO. But it remains a drugstore chain, which he doesn't like, given Amazon's dominance.
He just bought it after earnings. Finally, we're seeing positive momentum with earnings growth and lower costs. It's an easy trade. An investor would now see a fundamental turnaround.
Joe TerranovaShocking that it rallied 25.8% in January, since it was spiralling last year, down 43%. There's no clear catalyst for their rally, though it helped that Medicare payments would increase from 2025 to 2026. He's waiting for their report next Wednesday before deciding.
It's been problem after problem for them. Theft is forcing them to lose market share to Amazon. They're closing their worst-performing stores, opening health clinics and double-down on their non-drugstore businesses like Aetna and health insurance benefits manager. They have more than 900 medic clinics and 200 Oak Street health clinics. (Walgreens is reducing their clinics and Walmart got rid of all their clinics, because they can't find workers.) CVS bought Aetna 6 years ago, but managed care providers have been struggling for 1.5 years as people catch on post-Covid surgeries, which means paying out for those procedures. Meanwhile, Aetna dropped the ball on Medicare advantage plans for seniors; the plans were too cheap, which attracted many more customers, so people are using more healthcare services as the government is getting stingier with payments. Poor performance forced the CEO to be fired last October. Shares down -25% in December alone (healthcare stocks have fallen out of favour since the election and the Humana CEO murder). Then, Trump threatens to cut out the middlemen in health insurance. Just two days ago, the Justice Department slapped them with a lawsuit over controlled substances, which he thinks is damning. Their balance sheet is weak.