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Why Cvs Is Feeling More Robust


BusinessWeek Investor -- Inside Wall Street

Why CVS Is Feeling More Robust

On Apr. 4, when stocks were being pummeled and the Dow Jones industrial average and Nasdaq index were cratering, CVS, the nation's No. 1 retail drug chain, went the other direction. It was one of the winners that day, closing at 40 5/8 a share, up 17/16. The stock had been rising since early March, when it was down to 25. One reason: CVS is soon scheduled to roll out nationwide its specialty Procare stores. These are big-city pharmacies that cater to people with HIV, cancer, and other high-cost ailments. Two Procare outlets, which are staffed with highly trained pharmacists to deal with acute-care patients, have opened in New York.

"We expect the Procare pharmacies to generate sales of $1 billion a year," says Mark Husson, an analyst at Merrill Lynch, who rates CVS a long-term buy. This specialty market, he says, has potential sales of $11 billion a year. "CVS is my single best idea in the universe of stocks that I cover," says Husson. "CVS is in an excellent position," he says, because it has special access to three HMOs: Medco, which covers 51 million people, United Healthcare, with 8 million, and Pharmacare, with 6 million. CVS' online unit, CVS.com, has signed up with Merck and Healtheon/WebMD to be their exclusive electronic pharmacy. Husson expects CVS to earn $1.79 a share this year and $2.08 next, up from 1999's $1.55.By Gene G. MarcialReturn to top

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