Should You Buy CVS Stock At $90?

CVS Health stock (NYSE: CVS) saw a 15% fall in the last twelve months, in line with the broader S&P500 index, which was down 13%. However, in the longer term, CVS stock, with a 33% rise from levels seen in late 2018, has underperformed the S&P 500 index, up about 56%. We believe that CVS stock is undervalued at its current level of about $90, as discussed below.

This 33% rise for CVS stock since late 2018 is driven by: 1. CVS Health’s revenue, which grew 62% to $315 billion currently, compared to $195 billion in 2018. This was partly offset by 2. the company’s P/S ratio, which declined slightly but remained at around 0.4x, and 3. a 12% rise in its average shares outstanding to 1.3 billion from 1.2 million in 2018. This has meant that the company’s revenue per share grew 44% to $240 from $166. Our dashboard – Why CVS Health Stock Moved – provides more details on the factors behind this move over the last three years.