Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Analysis: A CVS-Aetna Merger Would Be Revolutionary

Courtesy of Benzinga.

Analysis: A CVS-Aetna Merger Would Be Revolutionary

Health care investors were blindsided on Thursday afternoon when Dow Jones reported that CVS Health Corp (NYSE: CVS) is exploring a $66 billion bid for Aetna Inc (NYSE: AET). As expected, Wall Street analysts have a lot to say about the potential deal.

In a new note on Friday, Citigroup analyst Alvin Concepcion said a marriage between CVS and Aetna makes sense in principle as the health care industry prepares for a major new competitor in Amazon.com, Inc. (NASDAQ: AMZN).

“In sum, we see this potential deal as both evolutionary and revolutionary given the dynamic healthcare environment and push toward consumerism coupled with a challenged retail backdrop and the need to combat a looming AMZN threat,” Concepcion said.

A $66 billion deal would be a tough pill for the $73 billion CVS to swallow.

At roughly $200 per share, Concepcion says the price for the potential deal is reasonable. That price represents 12.4x Aetna’a trailing 12-month EBITDA, which is within the range of the valuations of previous CVS acquisitions Caremark (11.8x) and Omnicare (22.0x).

However, Concepcion said CVS has a lot to gain from the potentially difficult deal. He estimates that the buyout could contribute an additional $0.24 in EPS for CVS within a year of completion. In addition, the two companies could leverage the power of their combined data to gain additional insights about customers.

Customers themselves could also be winners from the merger, benefitting from potentially lower pharmacy prices.

Citi has a Neutral rating and $87 price target for CVS stock.

Related Link: Walgreens: A Weak Stock Is A Weak Stock

________

Image Credit: By Ildar Sagdejev (Specious) – Own work, GFDL, via Wikimedia Commons

Latest Ratings for CVS

Date Firm Action From To
Sep 2017 RBC Capital Initiates Coverage On Outperform
Sep 2017 Jefferies Maintains Hold
Aug 2017 Loop Capital Initiates Coverage On Hold

View More Analyst Ratings for CVS


View the Latest Analyst Ratings

Posted-In: Analyst Color News Health Care Price Target Reiteration M&A Analyst Ratings General Best of Benzinga


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!