What’s in a name? Well, apparently a lot if you are the nation’s second-largest drugstore chain.
On Wednesday, CVS Caremark announced that it would change its corporate name to CVS Health. And to show they are putting their money where their mouth is, the company also said it would end the sale of all tobacco products a month ahead of schedule.
“We have opportunities to help play a bigger role in health-care delivery,” CVS Health CEO Larry Merlo told CNBC’s “Squawk on the Street” Wednesday. “The fact that we are delivering health care in a retail environment and at the same time selling tobacco was a growing contradiction for us. As of today we’re tobacco free.”
While the move could hit the company’s bottom-line, investors appear to be applauding it. Shares of the drug retailer hit a 52-week high Wednesday. So, will the stock go even higher, and is CVS Health a healthy investment for your portfolio?
“[CVS’ chart] shows a north by northeast, what’s not to like, nothing to see here kind of circumstance,” said Sterne Agee’s Carter Worth. “It has an orderly ascent. It’s not too hot, not too cold. And we think it has a little more left in it.”
Worth pointed out that the longer-term chart shows the most prospects for profit. “You have an opportunity to outperform the consumer discretionary, staples and health-care sector,” he said. “It’s a low beta annuity type opportunity. Stay long, be long.”
According to David Seaburg, head of sales trading for Cowen and Company, CVS Health’s core business operations give the company strong momentum as well. “The bottom line here is they have a winning model,” Seaburg said. “They are walking away from roughly $2 billion dollars in sales and it shows you that they have the confidence they will grow.”
Seaburg’s advice, “Keep putting money to work here. [The stock] is going to go higher.”