CVS
CVS Health Corp.
$105.91
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 37.0% above fair value
You pay
$105.91
Bear
$61.83
Fair
$77.29
Bull
$92.75
Bear
$61.83
-41.6%
$4.68 × 11x P/E
Fair
$77.29
-27.0%
$4.68 × 14x P/E
Bull
$92.75
-12.4%
$4.68 × 17x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
22.6x
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 $106.57 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $77.29 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 $106.57 (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