CVS Health: Insurance Business Challenges Continue (Archive)
Margin-crushed benefits segment and bearish charts keep CVS unattractive despite optically cheap valuation.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- My 'Sell' rating on CVS Health has performed well so far, as the stock is down more than 20% on a total shareholder return basis.
- There's no end in sight for margin contraction in the healthcare benefits business, which is plagued by higher loss ratios as a result of unfavorable policy terms for the insurer.
- Earnings expectation downgrades counter CVS' low valuation vs peers.
- Bears dominate the long-term technical charts on CVS relative to the S&P 500.
- A potential breakup of CVS Caremark may unlock value, but could also result in more leadership attrition in an already-troubled company.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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