After the finalization of the Target deal, the stock of the healthcare company has increased.
CVS Health Corporation recently acquired Target’s pharmacy along with clinic business due to which, during the pre-market trading, the stock of the healthcare company went up by 2.04% and traded at $94.48 per share. The pharmaceutical company also declared its quarterly dividend of $0.425 per share.
The following year, the pharma company has planned to raise its earnings outlook at the Annual Investor’s Day that will be held in New York. A recent press release of the company suggested that the estimations of adjusted earnings of CVS are within $5.73 and $5.88. These estimated earnings could suggest a year-over-year growth of 11.25 – 14.25%. In comparison to the earnings call for the third quarter, the health care company has increased its calculations by $0.05 per share.
As for the free cash flow predictions, CVS health is planning to generate $5.3-5.6 billion (FCF). About the common shares of the company, the board of directors has announced an increase of 21% in its quarterly cash dividends to $0.425. This increase in the cash dividend will result in an increase in the company’s three-month dividend as well, which is payable on February 2 of the following year. This dividend, which will be paid in 2016, will mark the increase in dividend for the 13th time since the year 2011. Presently, 28% is the compound annual growth rate of the company.
The acquisition of Target’s pharmacy and clinic business was a deal worth $1.9 billion, which was also announced at the Investor’s Day by the drugstore chain. It now owns over 1,672 of Target’s pharmacies in 47 different states. The operations at these pharmacies will be carried out through store-within-store format and will run under CVS’s name. CVS/pharmacy will be in all of Target’s stores that provide pharmaceutical services.
Target clinics will also be rebranded with CVS/pharmacy’s name ‘MinuteClinic’ and it will further introduce 20 new pharmacies/clinics in different Target Stores after the deal is finalized. These clinics will likely come into being in a time span of three years. Larry Merlo, the CEO of CVS stated that the company is looking forward to serve Target customers for a better and healthy lifestyle, with their leading clinical programs, including Specialty Connect, Maintenance Choice, and Pharmacy Advisor.
Furthermore, the CEO stated that the company will leverage its business scale and will offer cost saving and convenience to customers and payers. Presently, CVS stock is being traded at $96.50 indicating an increase of 4.22%.
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