Market Overview

What To Make Of The Rumored CVS Bid For Aetna

What To Make Of The Rumored CVS Bid For Aetna
Related CVS
Mid-Afternoon Market Update: On Deck Capital Jumps On Earnings Beat; Invacare Shares Plummet
Mid-Day Market Update: Crude Oil Down 2%; ConvergeOne Shares Spike Higher
What Election Rally? (TalkMarkets)
Related AET
The Health Care Stocks With A Lot Riding On The Midterm Elections
8 Biggest Price Target Changes For Wednesday
Vulcan Value Partners Quarterly Letter Q3 2018 (Seeking Alpha)

The big news on Wall Street Thursday afternoon was the potential $66 billion buyout of Aetna Inc (NYSE: AET) by CVS Health Corp (NYSE: CVS). Analysts are looking at the potential deal in terms of how traders should play the two stocks involved.

Aetna stock jumped 11.5 percent following the news of the potential bid, but Cantor Fitzgerald analyst Steven Halper took the opportunity to downgrade Aetna stock from Overweight to Neutral. Halper was previously bullish on Aetna but maintains his price target of $175 for the stock based on its fundamental valuation. Halper said there is enough uncertainty in the potential deal that the $200 rumored takeout price is not worth the risk of buying the stock.

Related Link: Analysis: A CVS-Aetna Merger Would Be Revolutionary

“While we believe that a CVS/AET transaction is not implausible, the risk/reward trade-off given the uncertainty is not attractive,” Halper said.


From the CVS standpoint, Mizuho analyst Ann Hynes said Friday the deal makes a lot of sense. Mizuho had previously discussed the potential advantages of CVS joining forces with a managed care company earlier this year.

According to Hynes, this merger could serve as a template for the future of the pharmacy retail industry.

“Similar to formulary management in pharmacy, this type of partnership between a retail pharmacy and a managed care company could be the next generation of formulary management in healthcare services,” she wrote.

Mizuho sees an opportunity for CVS to expand its number of MinuteClinics or create mini urgent care centers within CVS stores.

Mizuho maintains its Buy rating for CVS and has a $90 price target for the stock.


At time of publication, shares of Aetna were down 3.86 percent at $173.23. CVS shares were down 4.05 percent at $70.34.


Image Credit: hattiesburgmemory (CVS Pharmacy Uploaded by AlbertHerring) [CC BY 2.0], via Wikimedia Commons

Latest Ratings for CVS

Oct 2018Wolfe ResearchInitiates Coverage OnPeer Perform
Sep 2018Bank of AmericaMaintainsBuyBuy
Jul 2018CitigroupAssumesNeutralBuy

View More Analyst Ratings for CVS
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas Downgrades Price Target Reiteration M&A Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (AET + CVS)

View Comments and Join the Discussion!

Latest Ratings

JBLGoldman SachsUpgrades0.0
JRVRKeefe Bruyette & WoodsDowngrades40.0
ADMPB. Riley FBRDowngrades2.5
EAFVertical GroupDowngrades9.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

How Sector Rotation Manifests In Leveraged ETFs

45 Stocks Moving In Friday's Mid-Day Session