Walgreens, CVS stocks extend big rallies, amid optimism over COVID vaccine administration

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Shares of Walgreens Boots Alliance Inc. surged 8.1% in midday trading Tuesday, enough to pace the Dow Jones Industrial Average’s gainers, amid continued investor optimism over a potential COVID-19 vaccine. The stock, which is on track to close at a four-month high, has now run up 28.3% in eight sessions since it closed at an 8-year low of $33.52 on Oct. 29. Meanwhile, shares of fellow drug store chain CVS Health Corp. climbed 3.4%, putting it on track for an eighth-straight gain, which would be the longest win streak since August 2018. The stock has soared 24.8% since it last lost ground on Oct. 29. Morgan Stanley analyst Ricky Goldwasser estimates that Walgreens and CVS could administer 30% to 40% of total COVID-19 vaccines, which could add approximately 30 basis points of year-over-year growth for the companies in 2021. While it is too early to tell whether COVID vaccine revenues are one-time in nature, Goldwasser said he believes Walgreens and CVS “could deploy the incremental cash flow towards debt paydown, or buybacks, translating to additional upside.” Shares of Walgreens have dropped 27.1% year to date and of CVS have lost 6.1%, while the Dow has gained 2.6%.
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