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4 Big Pharma Stocks Amazon Could Disrupt Next

Amazon's move into pharmacy has shaved billions from big pharma companies

By Anthony Mirhaydari, InvestorPlace Market Strategist

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Amazon (NASDAQ:AMZN) made waves on Thursday by announcing a deal to acquire online pharmacy PillPack in a $1 billion deal, beating out Walmart (NYSE:WMT) which was also in talks with the company.

The online retail giant has made no secret of its desire to push into the healthcare space, forming an alliance with JPMorgan (NYSE:JPM) and Berkshire Hathaway (NYSE:BRK.B) to lower costs for employees.

The move also caps a long-running suspicion Amazon was looking to make inroads into the $400 billion pharmacy business.

The news is hitting a number of drug retailers extremely hard. Here are four to sell now:

Big Pharma Stocks: Walgreens Boots Alliance (WBA)


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Walgreens (NYSE:WBA) shares dropped roughly 10% on Thursday, falling to levels not seen since late 2014 capping a loss of 30% from the highs seen early last year.

In its post-earnings call, the company said it wasn’t worried about Amazon’s announcement as it knew for a while that PillPack was for sale.

The stock had been gapping higher after authorizing a $10 billion share buyback and reporting results — giving investors serious nausea no doubt. Quarterly earnings of $1.53 beat estimates by five cents on a 14% rise in revenues.

Big Pharma Stocks: CVS Health (CVS)


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CVS Health (NYSE:CVS) played down the significance of the deal, saying it already offers multi-dose packaging that can be mailed to patients directly.

Investors don’t agree, pushing shares down more than 6% to return to early June levels. Shares have been mired in a sideways consolidation range since February.

The company will next report results on August 8 before the bell. Analysts are looking for earnings of $1.61 per share on revenues of $46.4 billion.

When the company last reported on May 2, earnings of $1.48 beat estimates by eight cents per share on revenue growth of 2.6%.

Big Pharma Stocks: Rite Aid (RAD)


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After a short-lived excursion above its 200-day moving average, Rite-Aid (NYSE:RAD) shares are down more than 10% in trading on Thursday returning to a multi-month trading range as investors continue to look for possible upside from a proposed merger with Albertsons.

The company will next report results on September 26 after the close.

When the company reported on Wednesday, a loss of a penny per share matched estimates on a 0.9% decline in revenues.

Big Pharma Stocks: McKesson (MCK)


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Drug wholesalers like McKesson (NYSE:MCK) buy drugs from manufacturers and ship the therapies to pharmacies. They hold relatively low margins and could face intense pressure from Amazon since it’s business model overlaps with Amazon’s logistical might.

No wonder then that shares are down more than 5% returning to lows not seen since November.

The company will next report results on July 26 before the bell. Analysts are looking for earnings of $2.71 per share on revenues of $52.8 billion.

When the company last reported on May 24, earnings of $3.49 per share missed estimates by eight cents on a 6% rise in revenues.

 

Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.


Article printed from InvestorPlace Media, https://investorplace.com/2018/06/4-big-pharma-stocks-amazon-could-disrupt-next/.

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