In the wake of the omicron variant and a biotech boom, companies in the pharmaceutical sector’s retail arm are looking to adapt as markets brace for an uncertain year ahead. One of the industry’s most prominent names has had an excellent day so far, seeing prices shoot up admit good news. Indeed, CVS Health (NYSE:CVS) has been on a mostly upward trajectory for the past month, but today CVS stock has been trending in the green. Yesterday marked the first investor day since new CEO Karen Lynch took control, and investors had plenty of reason to be optimistic.
What’s Happening With CVS Stock
Today began with several announcements regarding CVS, one of which was that the company intended to buy back $10 million worth of CVS stock in the year ahead, following its recent success in certain therapeutic areas and anticipated expansions.
For investors, this should be welcome news. CVS stock is up 4% on the day as of this writing and has been advancing upward since markets opened. Today’s gains put it up by more than 7% for the week, While the stock fell heavily around the first of December, its recent rebound has it in the green by more than 4% for the month. Overall, fall 2021 has been an excellent season for CVS, which has risen by almost 16% since the start of October.
The last time CVS was trending in the news, it was due to the company’s closing of over 900 stores across the United States. While this announcement did not immediately send CVS stock into a nosedive, it kicked off a week of decline that culminated with the aforementioned low point it hit on Dec. 1. However, since then, the stock has risen by almost 10%.
Why It Matters
Buy back better? The way it looks from here, that might be an apt description of the company’s mindset. There’s plenty of reason why today’s news has sent CVS stock up.
Corporate buybacks can either signal good or bad news for shareholders, but in this case, the news seems to be good. CVS’s recent venture into kidney care has proven successful as the company has received praise for its algorithmic method of predicting when patients may require kidney treatment. Following the recent investor day, it was reported that the company plans to build off this by focusing on providing healthcare solutions for patients with ailments such as diabetes and congestive hearth conditions.
These types of initiatives could certainly help boost sales as the company renews its focus on becoming a healthcare destination as opposed to the drug store chain it is commonly considered. In a case such as this, for a company to invest so much into buying back stock should signal that it foresees a year of growth ahead.
What It Means
Details regarding the omicron variant are slowly emerging, and as such, financial markets remain shrouded by uncertainty. Therefore, pharmaceutical companies are preparing to be the first to help treat the new strain. What we do know is that regardless of vaccine and treatment availability in 2022, there will certainly be the need not only for healthcare solutions but also for healthcare destinations, exactly the type of company that CVS is trying to become.
Last month, InvestorPlace contributor Dana Blankenhorn stated that CVS needed a “managed healthcare strategy” if it was going to catch up to its competitor United Healthcare (NYSE:UNH). While it may be too soon to say for sure, it seems that they may have found it. UNH stock is rising today but not to the same extent. CVS stock should be on everyone’s watch list as the new year takes off.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
