OSH - Oak Street Health upgraded at Raymond James on CVS takeover interest

Raymond James raised its rating on primary care service provider Oak Street Health ( NYSE: OSH ) to Outperform from Market Perform on Thursday, citing its potential to draw takeover interest from CVS Health ( CVS ).

The upgrade comes days after Oak Street ( OSH ) shares surged, propelling the competitors Cano Health ( CANO ) and CareMax, Inc. ( CMAX ) after Bloomberg reported that the pharmacy chain is in talks to acquire the company in a $10B deal.

Citing CVS ( CVS ) remarks at the JPMorgan Healthcare Conference, Raymond James analyst John Ransom argues that the pharmacy retailer looks ready to pursue its long-term vision at the expense of its 2024 earnings targets.

“CVS comments at the JPM conference suggest they are more inclined to reposition the company for its LT strategic vision and potentially sacrifice their 2024 EPS targets,” the analyst wrote, setting a $35 per share target on Oak Street ( OSH ).

Ransom estimates a 70% likelihood of an M&A deal between the company and CVS ( CVS ).

Read: Seeking Alpha contributor Zach Bristow breaks down Oak Street’s ( OSH ) Q3 2022 results.

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