CVS Plunges On Earnings, And This Chart Says The Pain Has Just Begun

Summary:

• CVS Health Corp CVS was trading 8 percent lower on Wednesday after posting mixed earnings and disappointing guidance.
• This likely marks the beginning of an extended downside move over the coming weeks.

CVS Health Stock Weekly Chart

The retail pharmacy company reported earnings per share of $2.14 and total revenue of $54.42 billion, compared to analyst estimates of $2.05 and $54.48 billion. For the current year, management expects earnings of $6.68-6.88, below the consensus of $7.41 per share.

CEO Larry Merlo cautioned that, “This will be a year of transition as we integrate Aetna and focus on key pillars of our growth strategy. We are aware of the need to address the impact of headwinds that exerting a disproportionate impact.”

In analyzing the market cycles for CVS, we can see it is likely now in the declining phase of its current cycle. The stock had a negative intermediate cycle pattern and failed in resistance. Our projection is for the stock to fall to $58, and as low as $55 by late-March.

Related Links:

Bloomberg Columnist: Investors Should Question CVS Outlook Following Writedown

Q4 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolios