Leerink Partners Would Buy CVS Health (CVS) on Current Weakness

Leerink Partners reiterated an Outperform rating and $125.00 price target on CVS Health (NYSE: CVS) following the company's 3Q earnings and conference call. Management highlighted that the core business continues to grow at a healthy rate. While 2016E EPS guidance is below consensus expectations, management reiterated that their longterm adjusted EPS growth guidance has always been 10-14%.

Analyst David Larsen commented, "On the call, management highlighted that the core business continues to grow at a healthy rate. While 2016E EPS guidance is below consensus expectations, management reiterated that their longterm adjusted EPS growth guidance has always been 10-14%, and 2013 through 2016 reflects a 13-14% CAGR. We are still working through all of the numbers, data and our model, but our initial thoughts are that CVS is becoming a very large organization, and with all of the new client wins, it is becoming increasingly tough to show rapid margin growth in year 1 of those client-adds. Now that expectations have been re-set, and the stock is pulling in, we think the shares have been largely de-risked. There does not appear to be any unfavorable exposure from generic inflation or pricing concerns r/e specialty and brand price hikes. We remain positive on CVS and would recommend buying weakness."

For an analyst ratings summary and ratings history on CVS Health click here. For more ratings news on CVS Health click here.

Shares of CVS Health closed at $103.80 yesterday.

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