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Critical asset just had biggest fall on record (Ad)
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
AT&T will give $5 to customers hit by cellphone network outage
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
Laser breakthrough could send stock soaring 2,467% (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Critical asset just had biggest fall on record (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
What recession? Professional forecasters raise expectations for US economy in 2024
Critical asset just had biggest fall on record (Ad)
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
AT&T will give $5 to customers hit by cellphone network outage
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
Laser breakthrough could send stock soaring 2,467% (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Critical asset just had biggest fall on record (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
What recession? Professional forecasters raise expectations for US economy in 2024
Critical asset just had biggest fall on record (Ad)
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
AT&T will give $5 to customers hit by cellphone network outage
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
How this AP photographer captured a unique splash at the swimming worlds with an underwater camera
Laser breakthrough could send stock soaring 2,467% (Ad)
Delays in promised Western military aid to Ukraine are costing lives, the defense minister says
MILAN FASHION PHOTOS: Feben, Rave Review promote looks for women of all shapes, ages and sizes
Critical asset just had biggest fall on record (Ad)
Caribbean leaders meet with Haiti's prime minister. Foreign force deployment is on the agenda
What recession? Professional forecasters raise expectations for US economy in 2024
Critical asset just had biggest fall on record (Ad)
Stock market today: Asian shares mostly decline, while Tokyo again touches a record high
AT&T will give $5 to customers hit by cellphone network outage

Are CVS store closures prescription for better financial health?

Key Points

  • CVS plans to close dozens of pharmacies in Target stores beginning in February.
  • The retail pharmacy industry has been grappling with challenges, impacting CVS, Walgreens and Rite-Aid.
  • CVS's long-term strategy includes closing around 900 stores and shifting towards becoming a healthcare-focused company.
  • 5 stocks we like better than CVS Health

After CVS Health Corp. NYSE: CVS said it would shutter dozens of pharmacies in Target Corp. NYSE: TGT stores, the stock immediately declined by 3%, but in the January 16 session was bucking the broad market downturn with a gain of 0.71%.

Overall, the retail pharmacy industry has been fighting an uphill battle. 

Target stock was flat for the session, outperforming a market selloff driven by worries about slower-than-anticipated Federal Reserve rate hikes this year.

A little background on the pharmacy industry, to give context to CVS’ move: CVS has been moving into the managed care industry and is tracked with healthcare stocks in the Health Care Select Sector SPDR Fund NYSEARCA: XLV.

In the past, the company has said its retail pharmacies are key tentpoles of its managed care strategy. However, the retail pharmacy industry as a whole has struggled.

Pharmacy closures begin in February

CVS said it would close the Target pharmacies between February and April. 

The company said in 2023 that it would slash costs, meaning thousands of layoffs, as it pivots more in the direction of healthcare and away from the retail pharmacy business. 

CVS bought Target’s pharmacy business in 2015 for $1.9 billion. It’s operated pharmacies inside Target stores since then, with a presence inside about 1,800 Target stores. In total, CVS operates about 9,000 pharmacy locations in the U.S. 

In 2021, the company said it would begin the process of closing about 900 stores, part of the move toward becoming a healthcare company instead of a retailer. CVS has been on the path toward closing locations. It’s also made acquisitions of healthcare producers and a chain of primary care facilities for senior citizens. 

The company reportedly said employees affected by the Target location closures would be offered jobs elsewhere in the company.

Target has not yet commented on the pharmacy closures.

Investors growing optimistic about CVS? 

The CVS chart shows the stock rallied with the broad market in December, but it’s been in a long decline since late 2022. The stock ended the January 16 session near the top of its daily trading range, a good sign of investor optimism. 


In addition to CVS, the other publicly traded U.S. pharmacy chains are Walgreens Boots Alliance Inc. NASDAQ: WBA and Rite-Aid Corp. NYSE: RAD.

Walgreens is expected to see an earnings decrease of 19% this year after several quarters in a row of net income decline. The company’s earnings rose in 2021 and 2022, but as foot traffic due to Covid medications slowed, earnings and revenue both declined.

Walgreens stock has had a rough road. The stock has not posted a gain on a one-year, five-year or 10-year basis. It’s eked out a small gain in the past month, but the longer term doesn’t signal the best financial health. 

Walgreens slashed dividend, cutting costs

The Walgreens dividend was recently slashed, another sign of a tenuous financial condition.  

Walgreens recently said its efforts to cut $1 billion in expenses this year were well underway. In its most recent quarterly earnings call in early January, CEO Tim Wentworth said, “Everything is on the table to deliver greater shareholder value.” 

Walgreens stock has been whipsawed since its earnings report, and finished the January 16 session just a shade below its 50-day moving average. It’s at a critical juncture right now which will determine whether or not it will bounce off that line or continue declining. 

Penny stock Rite-Aid in bankruptcy protection

Walgreens has also been acquiring healthcare-related businesses, although it’s streamlining in that area with some planned facility closures this year. 

Rite-Aid is currently in bankruptcy protection, and on January 16 said it was closing stores this year. In addition to decreased traffic from Covid treatments, Rite-Aid is also facing a heavy debt burden and lawsuits over over-prescriptions of opioid products. 

Rite-Aid, which has become a penny stock, has also made noises about leaning into the healthcare industry, has too many problems on its hands at the moment to make a significant business shift. 

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Should you invest $1,000 in CVS Health right now?

Before you consider CVS Health, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and CVS Health wasn't on the list.

While CVS Health currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
CVS Health (CVS)
4.8065 of 5 stars
$77.20+0.1%3.45%11.95Moderate Buy$90.11
Health Care Select Sector SPDR Fund (XLV)N/A$147.86+0.5%1.35%15.12N/AN/A
Walgreens Boots Alliance (WBA)
4.6014 of 5 stars
$21.73+0.7%4.60%32.92Reduce$26.09
Rite Aid (RAD)
0.2722 of 5 stars
$0.00-100.0%N/A-0.04$1.00
Target (TGT)
4.8273 of 5 stars
$151.48+0.8%2.90%19.32Hold$155.31
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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