Analysts Love CVS Health Shares Following Aetna Deal

November 27, 2018 11:11 am
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CVS Health Corp (NYSE:CVS) and Aetna Inc (NYSE:AET) on Monday received the final state approval for their $69 billion merger, and CVS said it expects to the deal to close this week. CVS stock has dramatically lagged the S&P 500 in the past three years, but analysts love the company’s post-merger opportunities.

Cantor Fitzgerald Initiates

Cantor Fitzgerald analyst Steven Halper initiated coverage of CVS stock with an Overweight rating and $96 price target. According to Halper, CVS and Aetna will soon create a brand new healthcare model in the U.S.

“We expect CVS to integrate AET clinical capabilities to enable a strong patient experience at its widely recognizable MinuteClinic locations,” Halper wrote in the note.

He said CVS will likely transition Aetna member patients to lower-cost care options, such as MinuteClinics and CVS specialty infusion service Coram.

CVS plans to begin rolling out its Aetna concept clinics in early 2019, so investors should soon get a glimpse of what to expect in the future.

Considering the growth potential of the new business model, the value of CVS’s digital assets and the fact that CVS shares currently trade at just 9.9 times Cantor’s 2019 EPS projections, Halper says there are a lot of things for investors to like about the stock.

Tigress Take

Tigress Financial analyst Ivan Feinseth said the end result of the merger will be CVS gaining both market share and mindshare in an increasingly dynamic health care industry.

“The combined company will be better positioned to capitalize on the healthcare industry’s changing dynamics including new reimbursement models and the shift to value-based healthcare services,” Feinseth said.

He also sees upside for CVS stock and recommends investors buy shares at current levels.

CVS traded around $78.10 Tuesday morning following the bullish commentary. Investors will be watching closely the rest of the week for an official announcement that the merger has been finalized.

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Photo credit: Ildar Sagdejev (Specious) – Own work, GFDL, via Wikimedia Commons

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