Goldwasser’s bullish case for CVS Health
CVS is a top pick for Goldwasser in the healthcare space, but she has an “underweight” rating on Walgreens. Making a bullish case for the former, she said on CNBC’s “The Exchange”:
CVS is cutting its footprint by 10%, they’re hiring people that have digital and technology capabilities, and they provided the Street with a very clear earnings growth target. So, we see upside opportunities.
According to the Morgan Stanley expert, CVS is much more than a drug retail company as it’s committed to innovating its business model. She has a price target of $125 on the stock that represents a 25% upside from here.
Last month, CVS reported its financial results for the third quarter that topped experts’ forecast by a good margin.
What is it that Walgreens is doing wrong?
On the flip side, her bearish thesis on Walgreens is primarily based on the fact that Walgreens continues to restrict itself within the traditional retail model. She added:
They’re not downsizing the number of stores, and in the long term, it could mean lower returns. They’re investing a lot in healthcare but not healthcare integration. They’re buying healthcare assets, but the management lacks that healthcare expertise that we think is critical.
Walgreens also reported strong results for its fiscal fourth quarter in mid-October. In terms of stock performance, CVS is up over 40% this year versus Walgreens at less than 20%. Other names she likes in the healthcare space include UnitedHealth, Anthem, Centene, and McKesson.