Can CVS sustain its Q3-Q4 2024 growth into 2025?

**CVS Health's ability to sustain its Q3-Q4 2024 growth into 2025 is contingent upon overcoming several key challenges and capitalizing on strategic opportunities.** Here's an analysis based on recent performance and future outlook: 1. **Consistent Performance in Medicare Advantage**: - CVS's Medicare Advantage (MA) enrollment exceeded expectations, tracking 105,000 ahead of its original guidance as of June 2024. - This growth aligns with the broader industry trend, which saw a 6.4% year-over-year increase in total individual MA enrollment in June. - The strong performance in MA enrollment suggests that CVS's strategies in this segment are effective, which could potentially drive future revenue and profitability. 2. **Strategic Initiatives**: - CVS plans to close approximately 270 stores by 2025 as part of an optimization strategy. - The company is also working on a multi-year cost savings initiative expected to generate over $500 million in 2025. - These initiatives indicate a focused approach to improve operational efficiency and profitability. 3. **Market Position and Performance**: - Despite facing headwinds, CVS has maintained its position as a key player in the sector, with a market capitalization of approximately $72.5 billion as of September 2024. - The pharmacy services and retail/LTC segments are expected to see improvements in profitability due to higher revenues and successful margin recovery strategies. 4. **Financial Projections and Analyst Confidence**: - Wall Street expects revenue and EPS to increase year-over-year for the fourth quarter. - Analysts have upgraded CVS Health, reflecting optimism about its growth potential. 5. **Challenges and Risks**: - CVS faces margin pressures across several business segments, which could impact profitability. - The healthcare benefits segment has experienced margin compression, prompting the company to implement recovery strategies. - The company's stock has experienced significant pressure, declining nearly 35% year-to-date, which could affect investor confidence and financial performance. 6. **Institutional Investor Activity**: - There has been some institutional investor activity, with Mitsubishi UFJ Trust & Banking Corp cutting its holdings, while others like Ridgewood Investments LLC have increased their stakes. - Institutional ownership stands at 80.66%, indicating confidence from large investors. In conclusion, while CVS Health has shown positive signs of growth and strategic initiatives that could support continued performance, it also faces significant challenges, particularly in margin recovery and maintaining enrollment growth in its Medicare Advantage segment. The company's ability to address these challenges and sustain growth into 2025 will depend on executing its strategic plans effectively and managing industry-specific risks.