Recommendation
The products and services offered by CVS are typically non-discretionary expenditures for their customers. This could be seen in recent years as the company was still able to grow revenue and profits even during the Covid-19 pandemic and periods of high inflation. The markets in which the Company operates remain strong and are likely to experience steady growth in the future due to demographic and other trends. The Company is expected to benefit from enterprise-wide cost savings initiatives, which aim to reduce the Company’s operating cost structure in a way that improves the consumer experience and is sustainable.
However, the industry faces competition and business risks associated with the prescription drugs that the Company purchases and sells. Additionally, the Company has significant principal repayment obligations in each year from 2023 to 2029, albeit with some flexibility in how they are serviced. Considering the factors above with regard to both the fundamental prospects of the business and the market pricing of the bond, we recommend investors MARKETWEIGHT the CVS 4.30% 2028 bond in their portfolio, with the bond being particularly suitable for conservative investors with a medium-term investment horizon.
| Industry: | Health Care |
|---|---|
| Bond Name | CVS 4.30% 2028 |
| Credit Rating (Moody’s)/Outlook | Baa2 |
| Maturity | US$5.00 Bn |
| Rank | Senior Unsecured |
| Current Price (June 9, 2023) | US$97.09 |
| Yield to Maturity (Ask) | 4.978% |
| Yield to Worst (at maturity | 4.978% |
| Recommendation | MARKETWEIGHT |
CVS Health Corporation | Fixed Income Analysis
