Last year’s shares of a health company CVS health (Nyse: CVS) collapsed by more than 43%. The company struggled with growing medical costs and regularly missed the earnings of earnings. He also received a new executive director. Investors had many reasons to remain suspicious in their future.
But recently, the company posted strong earnings that were actually better than expected. Under the new guidance, CVS seems to be better. Is this just a short -term surprise for investors or could it really be a sign that the job is in better shape? And can this lead to more together in the coming weeks and months?
In the first two months of 2025. Investors were much more bicony on health care than they were last year. Entering trading on Tuesday, CVS Health rose by 40%, significantly better than S & P 500with (Snpindex: ^GSPC) gain of only 2% during this stretch. The big catalyst was the latest report on the earnings of the company, which was released on February 12; The shares jumped 15% that day because of the results.
It was a solid start of the new David Joyner’s new executive, who took over in October, in an effort to reverse things. Not only did $ 97.7 billion revenue beat $ 97.2 billion expectations, but a three -month earnings per $ 1.19 earnings also extinguished past $ 0.93 expectations. Considering all the bad news and negative printing for CVS (even discussed the possible breakup of the company), it was an much needed positive event for shares, giving it some life.
But do investors go in front of them?
Rejuvenating expectations is great news, but that doesn’t mean CVS has no problem. The ratio of the company’s medical compensation (MBR) was 94.8% compared to 88.5% in the previous period. MBR tells investors how much premium that the health care provider collects for medical care; The higher the ratio, the more his margins are. The company says that increased use and decline in their star ratings for Medicare Advantage were key reasons for the exacerbation ratio.
The second concern is that all three main operational units of the company – health benefits, health services, pharmacies and wellness consumer – reported to adjust the number of operational revenues for the quarterly up than they were a year ago.
Although the CVS has technically defeated expectations, analysts simply cannot expect too much from business, given all uncertainty. In the midst of all questionnaires and bad results in the last quarters, it is simply difficult to predict how the CV will actually do.
