CVS Health (CVS) - Get CVS Health Corporation Report shares rose nearly 3.84% Wednesday after the healthcare company was initiated with an outperform rating and $76 price target by Bernstein analyst Lance Wilkes.
The price target represents a 41% upside from the stock's opening price Wednesday of $55.61.
Wilkes said he believes that CVS is currently undervalued with its balanced near-term earnings growth, long-term prospects for Aetna and a retail care delivery strategy making it an attractive company.
The analyst believes that CVS and Aetna will have leading capability in value-based care, but Wilkes also believes CVS will need to deploy $10 billion in capital over the next five to seven years to build capability.
While Wilkes expects CVS/Aetna to be the long-term winner in healthcare, the company's retail pharmacy business is expected to have stable volume growth but compressed volumes.
CVS is a holding in Jim Cramer's Action Alerts PLUS charitable trust.
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