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CVS Health Corp. (NYSE:CVS): Is there more Downside to the Stock?

An analysis by natey1015 on ValueInvestorsClub offers a bearish perspective for CVS Health, a stock that has fallen by almost 60% in the last three years. CVS shares were trading at $62.92 when the valuation was done by natey1015, vs. the closing price of $44.85 on Dec 31.

A row of shelves in a retail pharmacy, demonstrating the variety of drugs and over-the-counter products.

CVS offers health solutions in the United States. It operates under three segments namely Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. Health Care Benefits provides insurance products and related services to employer groups, individuals, students and workers. The Health Services segment caters to pharmacy benefit management solutions. The Pharmacy and Consumer Wellness segment sells prescription and over-the-counter drugs along with other consumer products.

Pharmacy and Consumer Wellness is the primary reason why the stock value has eroded over the past few years. The expected synergy from aggregating this segment to the health businesses is yet to materialize. The adjusted operating income of this counter has decreased from $7.26B in 2021 to an expected $5.70-5.75B in 2024. The front store revenue is expected to decay by 6.2% while the online segment continues to face pressure from leading players like Amazon.

The Health Care Benefits and Health Services businesses are expected to clock a growth rate of 3%-6%, with its implied value being driven by businesses from Aetna and PBM services. However, the growth rate in these segments is lower than its peers like Cigna, which offers a rate of 6%-9%. The implied valuation of this business is $67.4B, obtained by using an operating income multiple that is 20% lower than that commanded by Cigna.

The intrinsic value of CVS is between $120B and $135B, which is higher than the current Market Cap. However, it does not factor in the decaying value of the Pharmacy & Consumer Wellness segment that accounts for $38.5B-$54.4B. If zero value is assigned to this business, the implied value is close to the current market capitalization of CVS.

While we acknowledge the potential of CVS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

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We alerted our subscribers, and BTI returned 90% in just 16 months.

Now if you had invested just $10,000 in BTI in June 2024, you’d be sitting on $19,000 in October 2025.

Today, we have identified a nearly identical pattern in a digital-first giant trading at $3.

While the market panics over a surface-level revenue decline, our PhD-led research shows management has actually surgically cut $100 million in waste to focus on high-margin growth.

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