CVS
CVS Health Corp.
$106.11
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 37.7% above fair value
You pay
$106.11
Bear
$61.66
Fair
$77.08
Bull
$92.49
Bear
$61.66
-41.9%
$4.68 × 11x P/E
Fair
$77.08
-27.4%
$4.68 × 14x P/E
Bull
$92.49
-12.8%
$4.68 × 17x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
22.7x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $105.86 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $77.08 per share.
Warnings
The company's reported profits differ from official accounting profits by 237%. Check what costs are being left out of the adjusted number.
The company pays out 191% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $105.86 (from 41 analysts). Our estimate is 39% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples