Please ensure Javascript is enabled for purposes of website accessibility

Why CVS Health Stock Is Tanking Today

By Keith Speights - Mar 12, 2020 at 12:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The stock market is crashing due to coronavirus worries, and the healthcare giant is getting caught in the undertow.

What happened

Shares of CVS Health (CVS 0.19%) are tanking today, down 10.5% as of 12:29 p.m. EDT. The culprit behind the big decline was the market meltdown stemming from heightened worries about the impact of the novel coronavirus disease COVID-19. Investors panicked after President Trump announced Wednesday evening that most travel from Europe would be suspended for one month due to the viral pandemic.

So what

The important question to ask in the midst of the market sell-off is whether COVID-19 will really negatively impact the business prospects for a given company. In CVS Health's case, it's possible that front-store sales could be hurt if many customers stay home in an effort to minimize exposure to the novel coronavirus.

Exterior of a CVS pharmacy store

Image source: CVS Health.

CVS Health also owns Aetna, one of the largest health insurers. Aetna's medical claims could rise if the coronavirus outbreak is severe in the U.S.

On the other hand, CVS Health's retail pharmacy and pharmacy benefits management (PBM) businesses shouldn't be affected negatively by COVID-19. Patients will still need their prescription drugs and over-the-counter medications. There's even the potential that these sales will increase.

But also remember that COVID-19 will run its course over time. Any impact on CVS Health's business related to the pandemic will only be temporary.

Now what

The best thing that investors can do right now is to remain calm and focus on the long term. Investing in stocks comes with both ups and downs. We're seeing a big downturn now, but past experience shows that there's always a light at the end of the tunnel. There will be one this time, too, for CVS Health and many others.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CVS Health Corporation Stock Quote
CVS Health Corporation
$94.70 (0.19%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.