(Adds details on effect of tax overhaul, share buyback suspension, analyst comment; updates shares)
Jan 4 (Reuters) - CVS Health Corp said it expects the recent tax overhaul to boost its cash flow by $1.2 billion, sending its shares up more than 4 percent in morning trading on Thursday.
The No. 2 U.S. drug store chain, however, forecast quarterly adjusted earnings per share at the lower end of its previous outlook of $1.88-$1.92 as it suspended its share buyback program.
The company expects its tax rate to be about 27 percent in 2018 as a result of last month's tax reform bill and said it would make strategic investments, particularly after it completes its $69 billion acquisition of Aetna Inc.
CVS Health said last month it would buy health insurer Aetna to tackle soaring healthcare spending through lower-cost medical services in pharmacies.
The company then suspended its share buyback program to fund its Aetna deal, which it said on Thursday is expected to close after year-end 2018.
Its plan to cancel share buybacks have eroded about 340-610 basis points of growth in its annual adjusted earnings per share, CVS Health said.
CVS Health said it expects full-year net revenue to grow between 0.75 percent and 2.5 percent in 2018, helped by strong growth in scripts and claims.
Leerink Research analysts had estimated net revenue growth of 3.9 percent-4.4 percent.
The brokerage said it expected the recent network deals signed by CVS Health to drive more earnings growth in its retail business than what is being guided. (Reporting by Divya Grover in Bengaluru; Editing by Martina D'Couto)