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Morgan Stanley says UnitedHealth, Walgreens could benefit from CVS-Walmart fight. After CVS Health (CVS) announced Walmart (WMT) will leave Caremark's commercial and Managed Medicaid retail pharmacy networks at the end of April 2019, analysts at Morgan Stanley discussed the potential impact of the fight to both companies and to competitors. Analyst Ricky Goldwasser said the dispute "brings back memories" of the Express Scripts (ESRX) and Walgreens (WBA) breakup in 2011, but unlike in that case it is only the early days of the 2019/2020 selling season, not after the selling season concluded. Walmart's plans to leave should have a limited impact on CVS' FY19 EPS power, but adds uncertainty to PBM selling season if not resolved in the near-term, said Goldwasser. Morgan Stanley's Simeon Gutman said that if the dispute is not resolved, it could end up reducing Walmart's EBIT by about $260M in 2019, which he estimates could have a 7c, or 1.5%, impact on EPS. In terms of who may benefit if no resolution is reached, the team estimates both Walgreens and CVS retail could gain an incremental 25 bps of pharmacy share and that UnitedHealth's (UNH) Optum and Cigna (CI) could see a step up in PBM selling season win rates. However, given Walmart's relatively low share, they view the PBM share opportunity as "minimal."

UnitedHealth price target raised to $305 from $300 at Oppenheimer. Oppenheimer analyst Michael Wiederhorn raised his price target for UnitedHealth to $305 from $300 after the company reported quarterly results. The analyst notes that although investors were concerned about the Medicaid/MLR weakness, the overall results were strong, driven by Optum, which contributed about 60% to Q4 earnings. Since he expects this business to continue to drive results, the analyst reiterates an Outperform rating and would continue to be a long-term buyer of the stock.