Healthcare Giant CVS Files for NFT and the Metaverse-Related Trademarks

Key Insights:

  • CVS files NFT and Metaverse-related trademark applications.
  • Drugstores could follow in the footsteps of Walmart and deliver virtual shopping.
  • The healthcare sector could also benefit from blockchain, NFTs, and the Metaverse.

Interest in NFTs and the Metaverse has surged in recent months. A range of industries has taken to NFTs and the Metaverse. These include art, fashion, film, music, and sport.

In some countries, one sector that has been slow on the uptake is the healthcare sector. In the early days of Bitcoin (BTC), blockchain and crypto, the crypto sector identified blockchain attributes that would benefit the healthcare sector.

The COVID-19 pandemic and administrative burdens likely delayed the sector’s exploration of the digital world. This week, U.S healthcare giant CVS Health may be looking to break the mold.

CVS Health Applies for NFT and Metaverse-Related Trademarks

This week, CVS reportedly submitted a trademark application to sell “downloadable virtual goods” in the Metaverse.

According to the report, U.S. drugstore chain CVS aims to sell prescription drugs and other drugstore products in a virtual drugstore. CVS would then authenticate the products and sales with the use of NFTs.

The move by CVS comes after Walmart filed trademark applications in a move towards virtual stores in the Metaverse.

Virtual Drugstores and Healthcare Decentralization the Future Healthcare

As the U.S looks to return to some semblance of normality in the wake of the COVID-19 pandemic, the healthcare sector will likely need to take a close look at the benefits of blockchain, cryptos, NFTs, and the Metaverse.

In 2020, we explored how blockchain would change lives, the global economy, and the world. At the time, immediate healthcare sector benefits included the removal of the paper trail, making patients’ medical records available on a decentralized ledger, which would provide data points to support the fight against virus and disease.

As the healthcare sector looks at lessons learned from the COVID-19 pandemic, dissemination of information and access to critical data points could have arm healthcare workers with the necessary facts to combat viruses.

In October 2021, Forbes published an article exploring how blockchain could revolutionize healthcare. The report looks at reduced costs and new ways for patients to access healthcare. Forbes discusses one healthcare company called “Patientory.” Patientory sees blockchain networks capable of delivering a combination of transparency and privacy. Blockchain technology could give the healthcare sector access to medical data while withholding sensitive patient information. “Up-to-date patient histories and data, pandemic tracking and reporting, secure communication with verified healthcare personnel” form part of Patientory’s solutions.

For the healthcare sector, general practitioners and medical specialists could ease the strain by going Metaverse. While physical examinations need to be in person, some elements of the work could go virtual, which would reduce hospital traffic.

CVS Follows in the Footsteps of Other Mainstream U.S Corporations

In recent months, other major U.S corporations submitting NFT and Metaverse-related trademark applications include:

When considering the demise of department stores and the sharp increase in online retailing, the Metaverse could be the next best thing for online shoppers. Virtual stores could use NFTs to authenticate online sales.

One risk for the healthcare sector is the marked increase in illicit activity. Appropriate controls would need to be in place to protect personal data and personal privacy.

Inflation: The Fed’s Guiding Light and the Biggest Worry for Investors

While indexes did manage to make small gains yesterday, they remain in negative territory for the year. The “buy-the-dip” trading mentality that helped indexes swiftly rebound from downturns the past couple of years has mostly been smothered by uncertainty about Federal Reserve monetary policy in the months ahead.

In other words lots of people are freaked out and a bit nervous about how stocks might perform in a rate hiking environment.

Just keep in mind, from June 2004 to June 2006 Fed Funds went from 1.00% to 5.25%. There were a total of 17 rate increases across this period, each 25 basis points and stocks did not get hammered.

Inflation

Today, inflation seems to be the Fed’s guiding light and investors are extremely concerned that data between now and the central bank’s next meeting on March 15-16 will fail to show any signs that price pressures are easing. That’s largely due to fallout from the Omicron Covid wave that further exacerbated supply chain dislocations and labor shortages.

Those two issues have been key drivers of escalating inflation which has pushed higher nearly every month since June of 2020. The only exceptions are October, when CPI came in flat, and November when it dipped a puny -0.1%.

Data to watch

Upcoming data to watch includes the January Consumer Price Index (CPI) tomorrow, the PCE Prices Index for January on 2/25, the February Employment Situation on 3/4, and March CPI on 3/10.

Today, investors will be scrutinizing the Energy Information Administration’s Petroleum Status Report. The report last week showed an unexpected decline in U.S. crude inventories, as well as raw oil at the Cushing, Oklahoma delivery point for WTI. Cushing inventories stood just above 30 million barrels as of January 28—down from 60 million barrels at the start of 2021, and down from 37 million barrels at the end of 2021. U.S. distillate levels are particularly concerning, with inventories as of January 28 falling to the lowest seasonal level in eight years.

The low inventories, which were -26 million barrels (-17%) below the pre-pandemic five-year average, are likely the result of booming manufacturing and freight demand. The American Petroleum Institute yesterday estimated that distillate inventories declined last week by -2.2 million barrels while U.S. crude supplies likely dipped by over -2 million barrels.

Most oil insiders believe the world oil market is under-supplied with OPEC+ struggling to meet production targets and economic activity rapidly rebounding from the Omicron wave that swept the entire globe.

Analysts think that signs of easing tensions between Russia and the West could stall the current rally in oil prices but it will likely only be temporary as supply concerns escalate.

On earnings front, today’s highlights include Bunge, Cerner, CVS, Disney, GlaxoSmithKline, Honda, Mattel, MGM Resorts, Motorola, O’Reilly Automotive, Toyota, Twilio, and Uber.

Shares of Insurer CVS Health Fall on Mixed Guidance

CVS Health shares fell over 2% in pre-market trading on Wednesday after the drugstore chain and health insurer provided mixed guidance for the full year, despite beating earnings and revenue estimates in the fourth quarter.

The Woonsocket, Rhode Island-based insurer reported quarterly adjusted earnings of $1.98​​ per share, beating the market expectations of $1.93 per share. The insurer’s revenue jumped over 10% $76.60 billion from a year ago. That too beat the Wall Street consensus estimates of $75.67 billion.

That was largely driven by strong demand for COVID-19 tests and vaccinations related to the Omicron variant. Administered more than 8 million COVID-19 tests and more than 20 million COVID-19 vaccines nationwide in the fourth quarter of 2021.

For the full year, the company administered more than 32 million COVID-19 tests and more than 59 million COVID-19 vaccines, while maintaining a strong commitment to vaccine and testing equity by optimizing site locations and targeting outreach initiatives to reach vulnerable populations.

The insurer reaffirmed its adjusted earnings per share guidance range of $8.10 to $8.30, versus the market expectations of $8.27; however, it revised down its cash flow outlook to $12.0 billion to $13.0 billion from $12.5 billion to $13.0 billion.

CVS Health stock fell over 2% to $108.35 in pre-market trading on Wednesday. The stock rose over 7% so far this year after surging more than 50% in 2021.

Analyst Comments

CVS Health (CVS) reported adj. EPS of $1.98, ahead of consensus of $1.83 and $1.90-$1.95 implied by 2021 guidance. The beat was driven by strong results in Retail/LTC. 2022 guidance of$8.10-$8.30 was reaffirmed. On the call, we look for more details on the pace of COVID vaccinations, which could present upside to guidance, and the update on the primary carestrategy,” noted Charles Rhyee, equity analyst at Cowen.

CVS Health Stock Price Forecast

Eighteen analysts who offered stock ratings for CVS Health in the last three months forecast the average price in 12 months of $115.76 with a high forecast of $125.00 and a low forecast of $106.00.

The average price target represents a 4.45% change from the last price of $110.83. Of those 18 analysts, 15 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $125 with a high of $219 under a bull scenario and $64 under the worst-case scenario. The investment bank gave an “Overweight” rating on the drugstore chain and health insurer’s stock.

“Combination with Aetna creates a fully integrated healthcare delivery channel, positioning CVS Health (CVS) as a premier player in the transformation of US healthcare. We envision CVS as having a pivotal role in reshaping access to health care by leveraging on existing real estate to create local healthcare hubs, leading to additional synergies,” noted Ricky Goldwasser, equity analyst at Morgan Stanley.

“Combination with Aetna provides a path for CVS to return to 10% earnings growth over time from alignments of Aetna membership and cost synergies.”

Several analysts have also updated their stock outlook. Jefferies raised the target price to $120 from $115. Bernstein lifted the target price to $116 from $111. Truist Securities upped the target price to $124 from $118. Evercore ISI increased the target price to $120 from $115.

Technical analysis suggests it is good to buy as 100-day Moving Average and 100-200-day MACD Oscillator giving a strong buying opportunity.

Check out FX Empire’s earnings calendar

Wall Street Week Ahead Earnings: KKR, Walt Disney, Coca-Cola, Twitter and PepsiCo in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion could hit the stock market hard over the coming months. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of February 7

Monday (February 7)

TICKER COMPANY EPS FORECAST
ACM AECOM $0.77
CHGG Chegg $0.13
HAS Hasbro $0.85
LEG Leggett & Platt $0.73
ON ON Semiconductor $0.94
THC Tenet Healthcare $1.49
TSN Tyson Foods $2.01

 

Tuesday (February 8)

IN THE SPOTLIGHT: KKR

The U.S.-based investment firm KKR & Co is expected to report its fourth-quarter earnings of $1.02 per share, which represents year-over-year growth of over 108% from $0.49 per share seen in the same period a year ago.

The company that manages multiple alternative asset classes would post revenue growth of 17% to $784.8 million. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

“Strong near-term growth with fundraising supercycle and GA accretion coming into earnings, but we see this reflected in the price at the current valuation for a business model with greater earnings contribution from the balance sheet (40%). While strong investment performance could drive upward estimate revisions, we have less visibility on more episodic investment income gains,” noted Michael Cyprys, equity analyst at Morgan Stanley.

“Mgmt’s increased focus on expanding the platform with adjacent strategies and scaling successor funds should drive higher fee-related earnings (FRE).”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 8

TICKER COMPANY EPS FORECAST
BP BP $1.18
IT Gartner $2.47
HOG Harley-Davidson $-0.37
LYFT Lyft $-0.46
PFE Pfizer $0.85

 

Wednesday (February 9)

IN THE SPOTLIGHT: WALT DISNEY

Walt Disney, a family entertainment company, is expected to report its fiscal first-quarter earnings of $0.68 per share, which represents year-over-year growth of over 112% from $0.32 per share seen in the same period a year ago.

The family entertainment company would post revenue growth of over 30% to $21.15 billion. The company has beaten earnings estimates in most of the quarters in the last two years, at least.

Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead. Disney’s underlying IP remains best-in-class, supporting long term content monetization opportunities,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“During this period of FCF pressure from Parks closures, ESPN’s FCF generation is key to driving down leverage. Historical cycles suggest a potential return to above prior peak US Parks revenues in FY23.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 9

TICKER COMPANY EPS FORECAST
AFG American Financial Group $2.98
CVS CVS Health $1.56
HMC Honda Motor $0.95
RDWR Radware $0.13
SGEN Seagen $-0.74
TM Toyota Motor $3.76
UBER Uber Technologies $-0.33

 

Thursday (February 10)

IN THE SPOTLIGHT: COCA-COLA, TWITTER, PEPSICO

COCA-COLA: The world’s largest soft drink manufacturer is expected to report its fourth-quarter earnings of $0.41 per share, which represents a year-over-year decline of over 12% from $0.47 per share seen in the same quarter a year ago. However, the company’s revenue would grow nearly 4% to $8.94 billion.

TWITTER: The social media giant is expected to report its fourth-quarter earnings of $0.35 per share, which represents year-over-year growth of about 8% from $0.38 per share seen in the same period a year ago.

The company would post revenue growth of over 21% to $1.57 billion. Twitter expects revenues of approximately $1.5 billion to $1.6 billion in the fourth quarter of 2021. GAAP operating income is expected to range from $130 million to $180 million, according to ZACKS Research.

With a focus on engineering and products, Twitter expects to increase headcount and costs by 30% or more in 2021. In 2021, the company expects total revenues to grow faster than expenses.

“Lack of Negative Revisions and Relative Valuation: Valuation continues to be expensive, but we think investors are likely to continue to pay a premium for Twitter (TWTR) given 1) continued turnaround progress and 2) platform scarcity,” noted Brian Nowak, equity analyst at Morgan Stanley.

“Execution Risk Remains Around Driving Advertiser ROI: Advertiser ROI has clearly improved on Twitter, but the company needs to improve ad targeting and measurability to compete with the larger players. To do that it will have to further personalize the content that users see and use its data more effectively, both of which remain key strategic challenges (and priorities) for management.”

PEPSICO: The Harrison, New York-based global food and beverage leader is expected to report its fourth-quarter earnings of $1.52 per share, which represents year-over-year growth of over 3% from $1.47 per share seen in the same period a year ago.

The U.S. multinational food, snack, and beverage corporation would post revenue growth of about 9% to $24.35 billion. It is worth noting that the company has consistently beaten consensus earnings estimates in the last two years, at least.

The company revised its organic revenue growth to 8% from 6% previously. The company estimates core earnings of $6.20 per share for 2021, compared to $5.52 in 2020, according to ZACKS Research.

PepsiCo struggles with supply-chain headwinds that have caused it to increase costs and limit its output. Investors will want to know whether the beverage company is winning this battle when it reports its financial results for the fourth quarter of 2021 on Thursday, February 10.

“For the quarter, we are expecting PepsiCo (PEP) to deliver EPS of $1.47, which implies flat YoY growth and is 4 pennies below consensus EPS of $1.51. Our $1.47 4Q21 estimate implies FY21 EPS of $6.20, which is at the low end of management’s expectation to deliver “at least” $6.20 in EPS and may ultimately prove conservative given PepsiCo’s (PEP) history of outperforming expectations. Since 1Q18, we can see that PEP’s reported EPS has come in above consensus in 14 out of the past 15 quarters, with an average upside surprise of+5%,” noted Vivien Azer, equity analyst at Cowen.

“As we are already almost a month into the new year, all eyes will be on PepsiCo’s (PEP) initial FY22 guidance. As a reminder, on the last earnings call management noted that at the time they expected FY22 performance to be in line with its stated long-term targets, which means MSD (+4-6%) organic revenue growth and HSD core constant currency EPS growth.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 10

TICKER COMPANY EPS FORECAST
AZN AstraZeneca $0.78
EXPE Expedia Group $-0.01
GDDY GoDaddy $0.41
K Kellogg $0.8
MCO Moody’s $2.3
PEP PepsiCo $1.52
TWTR Twitter $0.16
WU Western Union $0.53

 

Friday (February 11)

TICKER COMPANY EPS FORECAST
APO Apollo Global Management $1.08
D Dominion Energy $0.93
FTS Fortis $0.58
MGA Magna International $0.81

 

CVS Could Rally Towards $100 as Covid Vaccines and Prescription Volumes Boost Earnings

The shares of CVS could rally towards the $100 mark after the company reported a better-than-expected earnings result thanks to the increase in Covid vaccines and prescription volumes.

CVS’s Earnings Surpass Analysts’ Expectations

CVS Health reported its third-quarter earnings earlier today, surpassing analysts’ expectations. The company generated $73.79 billion in the last quarter, surpassing the $70.49 billion expected by Wall Street analysts.

The earnings per share for the previous quarter was $1.97 adjusted vs. $1.78 expected. The drugstore chain and health insurer’s earnings were exceptional thanks to the boost it got from filling more prescriptions and giving more Covid-19 vaccines during the third quarter.

Thanks to the better-than-expected earnings result, the company adjusted its earnings per share outlook for the year to range between $7.90 and $8.00, up from $7.70 to $7.80. However, due to the numerous one-time expenses such as the acquisition of Aetna and others, CVS was forced to adjust its full-year guidance for earnings per share to between $6.13 and $6.23 from $6.35 to $6.45 previously.

CVS stock chart. Source: FXEMPIRE

CVS’s sales surged higher during the last quarter as more people came to stores for Covid-19 tests and vaccines. The company revealed that it administered 8.5 million tests and 11.6 million shots within the three months period that ended in September 2021.  The vaccine administration dropped from 17 million in the second quarter, while the tests increased from 6 million.

CVS Could Rally Towards the $100 Level

The shares of CVS are up by nearly 5% since the US market opened a few hours ago. At the time of writing, CVS is trading above $95 per share and could be set to break the $100 mark before the end of the year.

The stock price could rally as more people in the United States get tested and vaccinated against the Coronavirus. Year-to-date, CVS has added 43% to its value, making it one of the top performers in the pharmaceutical sector. More people could look to enter the stock market as the com

Will Earnings Season Bring Volatility To The Stock Market?

The Commerce Department last week reported that the U.S. economy grew at a +6.4% annual rate in the first quarter, slightly below estimates but still strong. If it would have come in real hot and much higher bears would have pointed to fanning the inflation flames even further.

This mindset of “bad-news-could-be-good-news” is helping to keep the stock market at or near all-time highs. If economic data somewhat disappoints it means the Fed stay dovish and accommodative for longer.

Fundamental analysis

That might be important to keep in mind as April data starting this week is expected to be extremely good. The April Employment Report is due next Friday and with upper-end of Wall Street estimates look for upwards of +1 million new jobs being added. Other key April data next week includes the ISM Manufacturing Index on Monday, and the ISM Non-Manufacturing Index on Wednesday.

employment

If the data comes in better than expected the bears will win the nearby battle and have the upper hand when talking higher inflation and the Fed perhaps tightening sooner than anticipated. So this week could be a bit tricky whereas “disappointing-data” could actually be digested as a win for the bulls and “strong data” a win for the bears.

The earnings calendar is packed again next week with big names including Activision Blizzard, Adidas, AllState, Cerner, Cigna, CVS, Dominion Energy, Enbridge, Etsy, Hilton Worldwide, Moderna, Monster Beverage, Nintendo, PayPal, Peloton, Pfizer, Rocket Companies, Square, TMobile, Wayfair, and Zoetis.

COVID-19

Checking in on U.S. progress against Covid-19, the number of adults that have received at least one dose is around 60%-65%, depending on the source. Global cases continue to rise led by India, where new infections have been hitting new record highs every day for weeks now. The country reported a staggering 380k new infections and 3,645 new deaths on Thursday while less than 10% of the population has been vaccinated.

Bottom line, the global restart will not be synchronized like many bulls had hoped would be the case and global growth may continue to struggle. At the moment the U.S. market doesn’t seem to care. It will be interesting to see if increasing inflation and continued global headwinds will eventually come home to roost.

SP500 technical analysis

SP500 earnings season

Earnings season can bring volatility to the stock market. At the beginning of May, cycles turn to the downside. Note, this is only a timing tool and it never shows the amplitude or strength of the move. When cycles are topping, it means we can expect a move down or choppy trading. This is it.

But relying on cycles only is not a good idea. Insider Accumulation Index shows bearish divergence on a daily chart. At the same time, Advanced Decline Line is still strong. The key resistance is around 4250 at the moment. I believe earning season can bring a profit booking to the stock market. If that happens, watch 4000 – 39500. It was a massive resistance and now it might turn into support. Intermarket Forecast is neutral. But if it turns to the downside, we will finally see a pullback in SP500.

For a look at all of today’s economic events, check out our economic calendar.