CVS Health, the biggest provider of prescription drugs in the US, raised the low end of its 2016 earnings forecast and increased its dividend ahead of a meeting with investors on Wednesday.
Adjusted earnings for 2016 will be $5.73 to $5.88 a share, CVS said in a statement, up from the $5.68 to $5.88 the company had projected on 30 October. Analysts predicted $5.80 a share, on average, according to data compiled by Bloomberg.
The shares rose two per cent to $94.48 in New York trading before the market opened. The stock has more than doubled in the last five years, outpacing a broader index of health-care stocks.
CVS will hold a meeting for analysts in New York, where investors will be looking for more details on the company’s earnings guidance.
The Rhode Island-based company has been expanding through acquisitions, agreeing earlier this year to buy the nursing-home pharmacy Omnicare and the pharmacy operations inside Target stores. Competitors are growing too, contributing to a record year for deals in the health-care industry. UnitedHealth Group’s pharmacy arm, OptumRx, bought benefit-management company Catamaran Corp. in July. Walgreens Boots Alliance’s agreement to purchase Rite Aid Corp., announced in October, could threaten CVS’s market share in pharmacy sales.
In October, CVS said its preliminary 2016 guidance was “in line with the company’s five-year growth targets.” The forecast assumed the completion of the Target pharmacy purchase and excluded integration and transaction costs associated with its recent acquisitions.
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