FBR Still Impressed with CVS Health (CVS) Following Inline Q4 Results; Affirms at 'Outperform'

FBR & Co. reaffirms its Outperform rating and $120 price target on CVS Health (NYSE: CVS) following the retail pharmacy giant's Q4 report earlier Tuesday.

Analyst Steven Halper noted that revenue increased 11 percent and was inline with expectations, as was the company's quarterly EPS.

Halper also commented, Management noted that the company had a very successful 2016 selling season. Gross wins are currently at approximately $14.8 billion, with new business at roughly $12.7 billion. The increase in new business is attributed to growth in new health plan clients as they closed their enrollment year. We note that 2016 retention rates remain at roughly 98%. Importantly, management noted that it expects the 2017 selling season to be strong, as well.

Bottom Line: Growth in PBM membership in 2016 sets the stage for acceleration in earnings growth in 2017. Meanwhile, free cash flow remains robust, providing significant financial flexibility to pursue acquisitions, an increased cash dividend, and share repurchase. The shares offer about 33% potential upside to our price target.

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

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