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CVS, the largest drugstore chain in the U.S., is also the only pharmacy-benefits manager/drugstore combination in the country following its acquisition of Caremark, which gave the company an entry into the mail-order drug market. That combination, Barron's says, makes CVS well-positioned to make it through a consumer-spending downturn or potential healthcare changes that could result from the upcoming 2008 presidential elections. Barron's says Wall Street appears to be ignoring the transformation, as the shares still trade like a traditional drugstore at 17x 2008 estimates, about the same as rival Walgreen's 17.4x. Among the issues worrying investors are the company's ability to absorb Caremark, and competition from big-box retailers such as Wal-Mart and Target, though analysts say it has lost very few prescriptions there. One analyst says a 15%-20% discount to competitor's multiples is "too big," and many expect the shares will rise some 20% to the mid-$40s once the company's hybrid status is acknowledged. Another potential moneymaker for CVS, analysts say, are its in-store clinics, which are staffed by nurse practitioners who can prescribe certain medications, such as for sore throats or earaches.

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