CVS
CVS Health Corporation
$93.26
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 23.7% above fair value
You pay
$93.26
Bear
$60.33
Fair
$75.42
Bull
$90.50
Bear
$60.33
-35.3%
$4.68 × 11x P/E
Fair
$75.42
-19.1%
$4.68 × 14x P/E
Bull
$90.50
-3.0%
$4.68 × 17x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
19.9x
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 $100.33 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $75.42 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.
Dividend-based valuation: $88.29 (above our primary estimate by 36%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $100.33 (from 41 analysts). Our estimate is 35% 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