[ad_1]
Pfizer, BioNTech and Modern (NASDAQ: mRNA) His shares have increased in recent months due to his work to develop vaccines against COVID-19. Moderna, which started the year with a share price of $ 19.50, has seen its shares rise more than 608% to date to $ 138.
CVS Health (NYSE: CVS) It’s probably not the first company you think of when you think of a “coronavirus” stock, but it will be one in 2021 and, unlike Moderna, it has been profitable for a long time.
Image source: Getty Images.
What’s next for CVS?
The pharmacy and health benefits provider will serve as a place where consumers can get their coronavirus vaccine, just as they currently serve those in need of COVID-19 diagnostic tests. Both initiatives will generate additional traffic to the company’s stores.
In his third-quarter earnings call, Larry Merlo, the outgoing CEO and president of CVS, said that 70% of those tested for COVID-19 at its retail stores were not previously CVS customers, and 40% of those tested for COVID-19 Evaluated at commercial sites in their Return Ready program were not returning CVS customers. Management is confident that some of those people will return for more typical pharmacy and healthcare reasons, and that is sure to help the company.
On top of that, once the vaccine is more widely distributed and more people are protected against coronavirus infection, CVS pharmacy and retail will improve as more people will return to regular doctor visits. That translates to more stocked prescriptions and more physical stores.
The company is riding the first wave of vaccinations
CVS Pharmacy and competitor Walgreens Boots Alliance (NASDAQ: AMB) have entered into agreements with the Centers for Disease Control (CDC) to be official providers of the vaccination program for communities and to participate in the Pharmacy Partnership for Long-Term Care program.
Long-term care facilities had the option of choosing which pharmacy they wanted to distribute the vaccine to workers and residents. CVS was chosen by more than 40,000 facilities, more than any other vaccine provider.
CVS said it will begin administering Pfizer’s COVID-19 vaccine in nursing homes starting December 21, adding that it will likely be able to use Moderna’s vaccine before December 28. Drug Administration approval after a committee meets today, Dec. 17, to discuss the vaccine trial data. The FDA has said in other documents before Thursday’s panel that it was inclined to grant Moderna’s candidate, mRNA-1273, an emergency use authorization.
CVS says it expects to vaccinate approximately 2 million people in long-term care facilities. In the case of two-shot vaccines from Pfizer or Moderna, the company can charge Medicare $ 16.94 for each initial dose and then $ 23.39 for the second, which would mean that the company could generate $ 90 million in revenue just from its participation in the program.
The publicity the company is receiving will also help it, especially once the vaccine is available to the general population at its more than 9,900 outlets. The company said it will set the vaccines in store on an appointment-only model.
YCharts mRNA data
The company was already in a strong position
While COVID-19 certainly had an adverse effect on CVS’s core pharmacy business, the company has done well this year due to its diversified revenue streams. It operates in three segments: Pharmacy Services, Retail, and Healthcare Benefits. Its pharmacy services revenue was down 1% in the third quarter, but retail revenue was up 6.9% year-over-year and its health benefits revenue was up 8.8% year-over-year.
For nine months, the company’s revenue was $ 199 billion, up 4% year-over-year. The company is on track for its 10th consecutive year of revenue growth and second consecutive year of net revenue growth. It’s hard not to like CVS’s 12-month-ago operating margin of 4.85%, which is above average for a pharmaceutical company.
See it as a buying opportunity.
CVS shares, despite what is turning out to be a good year, are down nearly 7% so far this year, while Moderna shares are up more than 600%. Both companies should prosper next year, but it’s easy to see that CVS stock is undervalued and needs to be adjusted, with a price-to-earnings (P / E) ratio of 11, compared to 82 for Walgreens. (Modern, no current net income, does not have a P / E ratio yet.) The vaccine rampage around Moderna, on the other hand, may have pushed the stock higher beyond a price it will be able to sustain, at least in the short term.
[ad_2]
