CVS Caremark is just so misunderstood
By Geert De Lombaerde Posted on September 1, 2009 at 9:03 amA week after Barron’s stated the case for the shares of CVS Caremark (Ticker: CVS), Fortune weighs in on the topic. Even though the stock has beaten the S&P by 16 points this year, it trails its peers.
The market questions whether a drugstore chain, which has expertise in retail sales, can run a PBM, which negotiates on behalf of employers and insurance plans to purchase drugs from pharmaceutical companies. As a result, CVS’s price/earnings ratio for the next 12 months is 13, while Walgreen’s is 15 and Medco’s is 20. That makes CVS, which is poised for strong growth, a bargain - no matter how the health-reform battle plays out.
Tags: Barron's, CVS Caremark Corp., Fortune, pharmacy benefit management, retail, retail health care, stock valuation
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