CVS Stock Soars After Conservative Earnings Guidance
Key Points:
* CVS Health (CVS) CEO David Joyner's conservative 2025 financial outlook has been met with enthusiasm by Wall Street, driving up the stock by nearly 15% as of Wednesday's market close.
* CVS beat earnings expectations for full-year 2024, reporting $372.8 billion in revenue and $97.7 billion in fourth-quarter earnings, exceeding Street estimates of $96.8 billion.
* However, the company did not provide full-year revenue guidance for 2025, but it did estimate adjusted earnings per share of $5.75 to $6.
* Joyner attributed the conservative approach to regaining confidence from investors after the company's health insurance business slowed amid higher-than-expected healthcare utilization among seniors in 2024.
* Analysts praised the guidance, highlighting a degree of conservatism from Joyner, who has led CVS for two full quarters.
* Joyner also defended the role of pharmacy benefit managers (PBMs) in the healthcare system, arguing that they have been successful in driving down drug prices.
* CVS is shifting away from traditional PBM practices by adopting a flat-rate plus small markup fee strategy similar to Mark Cuban's Cost Plus Drugs.
* Joyner believes this new PBM strategy, combined with CVS's healthcare services, will create a more efficient system in the long term.