Pharmacies Fall Ill As Insurer Picks Amazon

It has been a rough year for retail pharmacy chains CVS and Walgreens, with their stocks falling sharply while much of the market rallied. And that weakness is continuing today on fears that Amazon is getting ready to eat even more of their lunch. 😨

That’s because Blue Shield of California decided to drop the company’s pharmacy benefit management services. Instead, they’re partnering with Mark Cuban’s Cost Plus Drug Company and Amazon Pharmacy, potentially delivering major savings for its roughly 5 million members. 🤝

While California is a significant market for CVS, the broader implication that health insurers could begin to look beyond traditional pharmacy benefit management systems sent investors running for the pills. Get it? Instead of running for the hills? Anyway…

Losing pharmacy market share adds to the list of troubles these companies have faced recently. 😵‍💫

On the demand side, they’ve got inflation-pressured consumers spending less on discretionary purchases in their stores. On the supply side, they’ve got increased competition from “newer age” digital pharmacies and rising costs in their health insurance segment. And on the regulatory side, they’ve got the overhang of opioid-related lawsuits and anti-trust pressures.

Add it all up, and you’ve got significant downside pressure on these businesses and their stocks. 👎

$CVS shares fell 8% to nearly three-year lows, and $WBA dipped 4% to 13-year lows. Both are down over 30% over the last year, with investors struggling to find a catalyst for a turnaround anytime soon. 📉

GM Throws A Bone To Shareholders

Just weeks after securing a deal with the United Auto Workers (UAW) union that brought its employees back to work, General Motors is making a big move to appease investors.

The automaker announced today that it’s initiating a $10 billion buyback, increasing its dividend by 33%, and reinstating its full-year guidance. That’s despite a roughly $1.1 billion in EBITDA-related impact from the six weeks of labor strikes. 💰

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News You Auto Know

While the focus was elsewhere, some auto industry news flew under the radar. Let’s recap. 📰

First up, General Motors union workers ratified their record deal with the United Auto Workers (UAW) union. It looked dicey there for several days after seven of GM’s eleven U.S. assembly plants rejected the terms. However, today, it was confirmed the deal passed with roughly 54.7% of the 36,000 autoworkers who voted supporting it. With GM’s vote out of the way, investors await results from Ford and Stellantis workers, who are expected to approve the deal by a 2:1 margin.

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Lululemon Gets The “Passive” Pop

With Microsoft’s acquisition of Activision Blizzard officially complete, the S&P 500 needs to replace it with another stock. And this time, that stock is Lululemon. 🤩

The athleisure retailer saw shares jump more than 10% today, reacting to Friday’s after-hours news that it would be added to the index before the market opens on October 18, 2023.

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Siemens Seeks Support

Roughly four months after we last discussed Siemens Energy, the company is back in the news. 📰

Before getting into today’s news, the energy giant made headlines in June after scrapping its profit forecast and warning that major setbacks at its wind turbine subsidiary (Siemens Gamesa) could last years. That sent shares tumbling 37% in about two days, also pressuring Siemens AG, which owns about 35% of the company.

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