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CVS Is Positioned For A Strong 2016 And Beyond

Summary

CVS stock has seen volatility in 2015 despite posting impressive quarterly results. In the 3rd quarter of 2015, the company posted top line growth of 10.3%.

The purchases of Omnicare and Target's pharmacies have positioned the company to take advantage of economies of scale cost savings and increase top line growth through more prescription fills.

The overall pharmacy retail market is poised for growth going forward as a result of the aging population, increase healthcare access, and rapidly growing specialty pharmacy business.

CVS Health Corporation's (NYSE:CVS) stock is currently down nearly 14% from the 52-week high reached on July 29, 2015. Despite this recent drop, the stock is still sitting a little more than 20% above the 52-week low reached on August 24, 2015. Similar to many stocks in 2015, it has been an up and down year for the pharmacy health care company. The high degree of fluctuations is largely due to a relatively high valuation, the changing retail pharmacy market, and overall uncertainty in the world economy. Despite these headwinds, the company is doing a lot of things to position itself to take advantage of the growing pharmacy market, which I believe makes it a buy at current levels.

In its most recent quarter, the company posted a revenues increase of 10.3%, while adjusted earnings per share increase 12.5%, which met the company's guidance range. However, equally as important, the company generated approximately $1.3 billion of free cash during the quarter adding to the $3.4 billion year-to-date. This impressive cash generation...


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