There are two things that can happen in the near future for CVS
The first is the company acquires Aetna for 67.5 billion. As CVS itself only has a market cap of 70 billion, the company will have to take on a significant amount of debt in order to do so. Since Aetna only has a p/e of 30 and an ev/ebitda of 15 CVS better have a perfect execution, or else they may be in danger of bankruptcy or at the very least credit downgrading and looming debt. If we hit a recession this could mean cvs is in some serious trouble.
The other possibility is of course if CVS doesn't acquire Aetna. This could be due to an antitrust lawsuit, or the deal could fall through, but either way I see that as a recipe for panic selling. CVS is feeling the pressure to evolve into a healthcare company, as amazon is threatening to move in on pharmacy distribution and retail shops are imploding.
There is a lot of uncertainty moving forward for this company, and I think one should wait for a clearer picture of what the company will be doing prior to investing.
Submitted December 30, 2017 at 10:31PM by InvestingLifeSavings http://ift.tt/2CpvxXt
