CVS Health Corp (CVS-N)

Not only pharmacies, but offer health insurance, home care, pharmacy benefits management. CVS is the best-positioned healthcare company in the US. Trades at only 10x PE and pays a 5% dividend yield. He expects double-digit earnings growth in coming years despite the soft retail environment. Problems with Medicaid reimbursement should ease with the new administration and looser regulation.

It has taken one step forward and two steps backward for some time. The insurance business and pharmacy stores are holding it back. Only 75% of its stores are profitable. There are offers from Walmart and others to provide same day delivery services and this takes business away from CVS.

Recently bought. A laggard with a low valuation. A better choice than high-flying names.

Many headwinds, too big to overcome. Sell, take the loss.

He is expecting some relief on the regulatory side with less competition. It has a solid dividend yield and lots of cash flow. The stock looks cheap but the earnings are flat-lining.

200-day MA moving lower, stock price is below that. Basing since May. Retail side is the issue. Declining foot traffic, people are buying online. Integration problems with its various businesses. Earnings growth looks weak. 

He prefers growthier names, drug distribution, and traditional pharma like BMY.

They report Wednesday. Listen for what the CEO has to say. He has a big job, because CVS has very jumbled assets. He wishes him the best.

Still owns it and still believes has great assets. It's down because of management turnover and bad capital allocations, but it's fixable and the business is not dead. He has faith in new management.

They cut forecasts and changed their CEO. This continues to get punished (glad he sold it last spring). An aging population is cutting deeply into their margins. Recently, they were talking about breaking up the company. Let's see if the new CEO can right the ship.

Pharmacy side not doing well, as people are switching to online. Pharmacy benefits are doing OK. Basing since May. Seems to be trying to get above water; just today got above the 200-day MA. See if it stays there.

Long term, managed care might be where they'll be OK. Valuation discount in the stock price, but it's a value trap. 9-10x forward earnings, but growth rate is under 2%. He doesn't like to buy on activist shareholders getting in, because you don't really know what's going to happen. He buys based on numbers, with earnings growth in high single digits.

It's been miserable and was exiting some of his position today. Maybe they will sell some of their businesses. Operating insurance and providing benefits has raised their costs and growth a lot. Regulations have also hurt. He doesn't see growth.

All healthcare companies starting in pharmacies have been vertically segments like insurance, but they've had a tough time, because pharmacies are low-margin and getting tougher. Also, governments are getting more involved in drug pricing. Thirdly, post Covid medical procedures remain high which also squeezes margins. He exited CVS 6-8 months ago.

Likes the pharmacy benefits division, but retail is soft and affecting overall earnings and revenues. Consumer is moving more toward online and e-commerce.

Was originally a pharmacy then expanded into insurance and healthcare centres. Long run, it makes sense, but it had faced bumps. Their model will take a lot longer to play out, but they are the best at it. They are more than just a drug store. At current levels, you're fine to hold this.