Merrill Lynch announced it has increased its mid-term rating on CVS Corp. of Woonsocket to “accumulate” from ”neutral.”
Analyst Mark Husson, in a research note, said he believes CVS’s significant investments in the fourth quarter and for most of 2002 will increase the rate of same-store sales growth to “high single digits.”
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“The so-called ‘January effect’ often has the effect of rallying recovery plays,” he wrote. “In our view, CVS is the biggest potential recovery name in the sector. Good sales growth could multiply this effect.”
He said valuations, at similar levels to food retailers, appear at a floor given earnings expectations.
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(Reuters)
