Side effects of holding CVS stock have included regret and loss of
patience. At a recent $53, it is going for half its 2015 peak. Last
month, Barron’s called
CVS stock a buy in a cover story. The next week could prove pivotal
in determining whether shares are indeed headed for recovery.
CVS (ticker: CVS) will host an investor day on
Tuesday, June 4, wherein it will discuss the results of its HealthHub tests in
Houston. HealthHub is a new kind of CVS store that offers greatly expanded
health-care services. CVS offers walk-in care now through its MinuteClinic
chain within stores. HealthHub stores are likely to add more examination rooms,
health-care workers and services; include in-store blood labs for immediate
test results; and offer nutrition tracking, sleep tests, yoga classes, and more.
CEO Larry Merlo told Barron’s that he hopes to use
the investor meeting to discuss early HealthHub performance and
the best path forward for turning CVS into more of a health-services company.
What we know going into next week is that CVS
faces a long list of factors that could subtract from near-term growth. Some of
these appear fleeting, like CVS’s pharmacy-benefits manager, Caremark, having
to make good on drug rebate guarantees that were made when the inflation rate
for drugs was expected to be higher. Some could be more lasting, like broad
pressure on policy makers to bring health-care costs under control. CVS’s
purchase of Aetna last year, and its push into retail health-care services, are
meant to turn it into a company that cannot only weather health-care deflation,
but profit from it.
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