Report
Drugstores: Growth outlook undervalued
The double-digit EPS growth outlook at the drugstores is not fairly reflected in the current trough valuations. The sector is still yet to recover from the Amazon-related sell-off (a concern we view as overdone), while tax reform is yet to be fully incorporated into expectations. We identify multiple growth drivers at WBA and believe there is upside to both valuation and earnings. We reiterate our Overweight rating and $95 PT. While CVS is also undervalued, we view the risk-reward as more favourable at WBA, with CVS's growth strategy predicated on the AET deal. We remain Neutral on CVS on a relative basis, with a $90 PT.
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Atlantic Equities
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
Sam Hudson, CFA
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