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CVS-Aetna Merger Would Be Mostly Positive for Both

We have some concerns, but think a deal would bring operational opportunities.

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Several media outlets have reported that  CVS Health (CVS) is in talks to acquire  Aetna (AET). If these reports are correct, we believe it will largely be an operational positive for both companies despite some concerns.

From a valuation perspective, we continue to see strong upside to CVS, with the market underappreciating its well-positioned pharmacy benefit management business, but we view Aetna AET as overvalued because of excessive growth expectations.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.