Two pharmacy giants already play a key role in COVID-19 vaccinations. Walgreens Boots Alliance (NASDAQ: WBA) and CVS Health (NYSE: CVS) are helping to vaccinate residents and staff in long-term care facilities. They must have coronavirus vaccines in their stores to vaccinate the general public in the coming months. In that Motley Fool Live video recorded on December 16, 2020, head of health and cannabis department Corinne Cardina and Fool.com writer Keith Speights talk about which of these pharmacy stocks with a COVID-19 connection is the best choice to buy at the moment.
Corinne Cardina: Let’s talk about pharmacy actions. Walgreens and CVS Health signed an agreement with the US government. They go to nursing homes and administer vaccines to residents and employees. Both stocks of pharmacies underperformed S&P 500 for a while. What do you think of this as investments? Do you think they can manage? What do you think is the best purchase in the pharmacy space, if any?
Keith Speights: Well, I’ll say that, first of all, I’ve been a little concerned about pharmacy stocks for the past two or three years because of the potential threat of Amazon (NASDAQ: AMZN). Now, this is not just a potential threat. It is a real threat because Amazon threw its fruits into the ring and they are competing in the pharmacy space.
I was especially depressed, I would say, at Walgreens. In 2018, the CEO of Walgreens publicly stated that he was not concerned about competition from Amazon because the Internet giant bought PillPack and PillPack was too small and the CEO of Walgreens said, “Yes. They are so small. The business of pharmacies are so complicated. I’m not worried about Amazon. “I think I wrote an article at the time he was with his head in the sand and I still think he did it because you don’t forget a formidable competitor like Amazon.
My concern is that Walgreens in particular was potentially forgetting that concern or at least publicly minimizing it. But I think these two companies, Walgreens and CVS Health, understand that they have a real threat on Amazon.
But I think CVS Health is probably the best choice in this area because they are not just focused on retail pharmacies. CVS also has a large pharmaceutical benefits management division and has acquired Aetna, one of the largest health insurers in the United States. I think that diversification makes CVS Health an intriguing choice because I think that this will allow, over time, to be able to launch some more comprehensive and innovative health solutions.
I think CVS Health could be the winner and I think they will be able to defend themselves largely against Amazon, because they also launched home delivery and that sort of thing. So I think they are taking the steps that will position them to be able to withstand an attack or potential attack by Amazon in the coming years.
Corinne Cardina: Very good perceptions there.