NEW YOR (AP) — A Citi Investment Research analyst raised her price target on shares of CVS Caremark Corp. after the company received a pharmacy benefits management contract estimated at $3 billion per year.
Company shares rose more than 1 percent, or 45 cents, to $39.25 before the market opened Tuesday.
Analyst Deborah Weinswig kept a "Buy" rating on the stock and boosted her target to $46 per share from $41. That implies the stock will rise about 19 percent in the next year. Shares of CVS Caremark last traded over $40 in mid-2008.
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On Friday, the company said the Caremark unit will handle the mail-order and specialty prescription drug benefit for the Employees Health Benefits Program starting on Jan. 1. For the last three years, that benefit has been handled by Caremark rival Medco Health Solutions Inc. Weinswig said Caremark has made big improvements in customer service since it last had the mail-order contract, and those changes were "a major factor" in the win and could help the company gain more contracts after disappointing results in 2010 and 2011.
Caremark already handled the retail drug benefit for the union, which brings in about $4 billion in annual revenue according to Weinswig.
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