{"id":57985,"date":"2023-09-07T07:04:36","date_gmt":"2023-09-07T11:04:36","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/will-cvs-health-stock-recover-to-its-pre-inflation-shock-highs-of-110\/"},"modified":"2023-09-07T07:04:39","modified_gmt":"2023-09-07T11:04:39","slug":"will-cvs-health-stock-recover-to-its-pre-inflation-shock-highs-of-110","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=57985","title":{"rendered":"Will CVS Health Stock Recover To Its Pre-Inflation Shock Highs Of $110?"},"content":{"rendered":"
\n

CVS Health stock<\/strong> (NYSE: CVS) currently trades at $66 per share, about 12% lower than the level seen in March 2021, and it can see higher levels over time. CVS stock was trading at around $93 in early June 2022, just before the Fed started increasing rates, and is now nearly 30% below that level, compared to 19% gains for the S&P 500 during this period. This underperformance of CVS stock can be attributed to its rating downgrade in its most extensive health insurance plan for Medicare patients, with 1.9 million members. The reduced rating implies the plan\u2019s ineligibility for performance-based bonus payments from the government in 2024. Also, investors still have concerns about a potential recession despite a steady decline in the inflation rate in response to the Fed\u2019s aggressive rate hike plan.<\/p>\n

We note that CVS stock has had a Sharpe Ratio of 0.0<\/strong> since early 2017, much lower than 0.6<\/strong> for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3<\/strong> for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.<\/p>\n

Returning to the pre-inflation shock level of about $111 means that CVS stock will have to gain nearly 70%<\/strong> from here, and we don\u2019t think this will materialize anytime soon. That said, there is upside potential from its current levels. We estimate CVS Health Valuation<\/strong> at $90 per share, reflecting over 35% upside.<\/p>\n

Our detailed analysis of CVS Health\u2019s upside post-inflation shock<\/strong> captures trends in the company\u2019s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock\u2019s performance during the 2008 recession.<\/p>\n

<\/fbs-ad><\/p>\n

2022 Inflation Shock<\/strong><\/p>\n

Timeline of Inflation Shock So Far:<\/p>\n