It’s more bad news for pharmacy and health care giant CVS Health (NYSE:CVS) today, as word emerged that chicken giant Tyson (NYSE:TSN) was ditching CVS for a new health benefits provider. That proved unwelcome news for CVS shareholders, who sent CVS down modestly in Wednesday afternoon’s trading.
Tyson represents one of a handful—so far—of Fortune 100 companies that won’t use CVS Caremark for its pharmacy benefits anymore. In fact, Tyson instead shifted to a comparative newcomer in the field, Rightway, to handle the drug benefits for the 140,000 or so employees in Tyson’s fold. Rightway made quite a case for itself with a 15% discount on employers’ costs along with access to “concierge care” for employees to find them lower-cost alternatives to many common drugs, including “biosimilars” and generic versions.
Things are Looking Bad at CVS
In Washington, DC, things got so bad at one CVS store that it closed outright after being looted multiple times over the course of several months by a group of about 45 teenagers, reports noted. The items are reportedly sold to street vendors, who immediately resell the goods in question. Meanwhile, a report from the Boston Globe details disastrous conditions, including long lines, issues of staffing, and bathrooms in woefully unkempt conditions. CVS is reportedly planning “labor investments,” but there’s a question of whether the stores are producing sufficient revenue to even make that possible.
Is CVS a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CVS stock based on 14 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 10.45% loss in its share price over the past year, the average CVS price target of $90.53 per share implies 22.06% upside potential.
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