Cano Well being sinks 10% after no CVS deal introduced, Morgan Stanley be aware

Cano Well being (CANO) dropped 12% as a possible deal for CVS Well being (CVS) to buy the health-care supplier wasn’t introduced on Monday as perhaps some traders had anticipated and Morgan Stanley printed a be aware that argues for buybacks over M&A.

Cano Well being (CANO) on Monday gave again all of the 9% acquire from Friday after a Bloomberg report that CVS (CVS) was stated in unique talks to buy the health-care supplier. The report added that CVS was at the moment conducting due diligence on the operator of major care services. CVS shares plunged 11% on Friday at the least partially as a result of CANO hypothesis.

The weak point in CANO can also be partly attributed to a Morgan Stanley be aware that argues that CVS ought to now be focusing on inventory buybacks over M&A

“With CVS already deploying ~$8b in the direction of the pending acquisition of Signify, better near-term dependency on buybacks to bridge to EPS targets,and better charges, we expect administration could choose, at the least within the close to time period, for a extra measured method towards M&A and partnerships,” Morgan Stanley analyst Rick Goldwasser wrote in a be aware on Monday.

Goldwasser, who has an chubby score on CVS, additionally reduce his value goal to $124 from $127.

Goldwasser stated that whereas CVS did not touch upon the CANO report, he has no information of any potential or imminent deal.

“We see extra potential integration danger underneath a hypothetical take-out situation and query whether or not it is the foundational platform to launchpad CVS’s major care providing,” Goldwasser added.

Citi analyst final month estimated that Miami-based Cano (CANO) could also be price $14/share in a takeout.