Are Shares of CVS Still a Buy After the Launch of Amazon Pharmacy?

NYSE: CVS | CVS Health Corporation  News, Ratings, and Charts

CVS – The public health crisis has accelerated CVS Health’s (CVS) transformation from a pharmacy and retailer into a health insurance and healthcare supplier. Its recent decline due to the launch of Amazon Pharmacy, could be a buying opportunity.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

CVS Health Corporation (CVS) is a healthcare service provider in the United States, operating through three segments – Pharmacy Services, Retail/LTC, and Health Care Benefits. As the novel coronavirus continues to spread across the United States, CVS has rolled out thousands of COVID-19 test sites and launched a new business-to-business testing program for corporations and colleges. The company also provided home delivery of OTC and prescription drugs during the social distancing restrictions through CVS Pharmacy.

Last week Amazon launched its new pharmacy business, which will compete with CVS in selling prescription drugs.  As a result, CVS’s stock plunged, but since then has recouped some of its losses.

To compete with Amazon, the company will need to continue to concentrate on digitizing its operations. The company’s positive returns over the past six months combined with several other factors have helped it earn a “Buy” rating in our proprietary rating system.

Here’s how our proprietary POWR Ratings system evaluates CVS:

Trade Grade: A

CVS is currently trading above its 50-day and 200-day moving averages of $60.72 and $62.46, respectively, indicating that the stock is in an uptrend. The stock gained 4.2%, over the past three months, reflecting short-term bullishness.

CVS’s revenue increased 3.5% year-to-date to $67.06 billion in the third quarter ended September 2020. Operating income grew 11% from the year-ago value to $3.62 billion, while the pharmacy segment’s gross profit rose 10.7% to $1.90 billion in the third quarter.

CVS recently announced the expansion of its COVID-19 testing services. It plans to add nearly 1000 testing sites by the end of this year. Since March, the company has undertaken more than 5 million coronavirus tests. 

The retail division of CVS recently launched QuickRenew, an at-home contact lens prescription renewal tool, that allows users to renew their prescriptions online. 

Buy & Hold Grade: B

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade takes into account, CVS is well-positioned. The stock is currently trading just 13.3% below its 52-week high of $77.03.

The company’s net revenue grew at a CAGR of 13.3% over the past three years, while net income increased at a CAGR of 16.4% over this period. Also, EPS increased at a CAGR of 7.6% over the past three years. 

This can be attributed to the company’s long-term strategic plan of transforming health care and innovative solutions in tandem with the evolving economy to meet customer needs.

Peer Grade: B

CVS is currently ranked #1 out of 4 stocks in the Medical – Drug Stores group. Other popular stocks in this industry are Walgreens Boots Alliance, Inc. (WBA), Rite Aid Corporation (RAD), and Trxade Group, Inc. (MEDS).

WBA, RAD, and MEDS declined 4.1%, 12.1% and 11.7%, respectively, over the past six months. This compares to CVS’s 5.4% return over this period.

Industry Rank: B

The Medical – Drug Stores industry is ranked #34 out of the 123 StockNews.com industries. The companies in this industry sell health products, prescription drugs, general merchandise from physical retail locations and over-the-counter medications. 

The pandemic has revealed the limitations of the global healthcare system, and is inducing governments to take immediate action to transform the same. Initially, the industry experienced restrained growth as lockdowns disrupted the global supply chain and logistics. However, the market for medical supplies is expected to grow due to the increased requirement of PPE kits & N95 masks globally, the rising demand for ventilators, and the increasing need for diagnostic supplies. Also, CVS plans to roll out Covid-19 vaccines globally when those are ready to hit the market.

Overall POWR Rating: B (Buy)

CVS is rated “Buy” due to its impressive financials, short-and-long-term bullishness, and underlying industry strength, as determined by the four components of our overall POWR Rating.

Bottom Line

Healthcare demand is expected to grow due to the ongoing coronavirus pandemic and CVS can still thrive, even with the launch of Amazon Pharmacy.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is pretty impressive for CVS. It has an average broker rating of 1.31, indicating favorable analyst sentiment. Out of 25 Wall Street analysts that rated the stock, 19 rates it a “Strong Buy”. The consensus EPS estimate of $0.43 for the current year indicates a 4.9% improvement year-over-year. CVS has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $267.88 billion for the current year indicates a 4.3% increase from the same period last year.

Want More Great Investing Ideas?

9 “MUST OWN” Growth Stocks for 2021

Why Investors DON’T Care About Covid-19 Anymore

5 WINNING Stocks Chart Patterns


CVS shares were trading at $68.38 per share on Tuesday afternoon, up to $1.60 (+2.40%). Year-to-date, CVS has declined -5.03%, versus a 14.46% rise in the benchmark S&P 500 index during the same period.


About the Author: Imon Ghosh


Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CVSGet RatingGet RatingGet Rating
WBAGet RatingGet RatingGet Rating
RADGet RatingGet RatingGet Rating
MEDSGet RatingGet RatingGet Rating
AMZNGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!


Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Is General Motors the Next Tesla?

GM is not only a value play...it is potentially an explosive growth stock given a massive investment in electric vehicles. Time to get on board General Motors shares before its too late. Read on for more...

:  |  News, Ratings, and Charts

How to Outperform the Stock Market in 2021

The S&P 500 (SPY) is up over 70% from the ferocious bear market low set in March of 2020. Let me be emphatically clear…IT WONT BE THAT EASY IN 2021! So let’s discuss the 2021 stock market outlook including a game plan to outperform in the year ahead and my top 12 picks for today’s market. Read on for more…

:  |  News, Ratings, and Charts

2 Stocks That Could be Acquisition Targets in 2021: DropBox, Yelp

With the world's economy potentially entering an expansion stage, now may be the perfect time for bigger and stronger companies to exploit synergies by buying weaker companies that complement their businesses. Dropbox (DBX) and Yelp Inc. (YELP) are struggling with heightened competition in their respective industries and suffering consistent financial losses. Consequently, we think they could be potential targets for acquisitions this year. Let’s take a closer look.

:  |  News, Ratings, and Charts

3 "Strong Buy" Tech Stocks with PE Ratios Under 15

The optimism surrounding COVID-19 vaccine development and distribution has slowed the tech rally that powered the stock markets last year. However, increasing dependence on technology along with rising concerns regarding the efficiency of global vaccine deployment should keep this sector’s momentum going in 2021. Because some tech giants are currently facing regulatory scrutiny, and because most big tech companies are trading at sky-high valuations, we believe that betting on reasonably priced companies like Sony (SNE), HP (HPQ) and Amkor (AMKR) should generate significant returns.

:  |  News, Ratings, and Charts

2 Stocks That Could be Acquisition Targets in 2021: DropBox, Yelp

With the world's economy potentially entering an expansion stage, now may be the perfect time for bigger and stronger companies to exploit synergies by buying weaker companies that complement their businesses. Dropbox (DBX) and Yelp Inc. (YELP) are struggling with heightened competition in their respective industries and suffering consistent financial losses. Consequently, we think they could be potential targets for acquisitions this year. Let’s take a closer look.

Read More Stories

More CVS Health Corporation (CVS) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CVS News