An aging population and the nation’s new health insurance system are both expected to fuel an increase in the number of prescriptions filled by pharmacists.
So how can investors profit? CVS Caremark is the only integrated drugstore chain and pharmacy benefits management company. CVS is its retail pharmacy operation, while the Caremark unit runs prescription drug plans for employers, insurers and other customers. This combination means that Caremark can guarantee its customers access to at least one leading drugstore.
This combined business model is central to why financial analyst Mark Wiltamuth of Jefferies says the company is the drug retailer that’s “best positioned to capture the coming shifts in the marketplace.” His research note indicates total prescription volume across the industry could increase 3 percent by 2016 as millions of uninsured gain coverage.
Wiltamuth began covering the stock this week with a “Buy” rating and a target price of $71.