A new deal between Manulife Financial (TSE:MFC) and Loblaw (TSE:L) is presenting some mixed news for shoppers throughout Canada. The insurance company and the grocery store chain set up a new arrangement regarding drug pricing. The deal affects roughly 260 different medications that fall under Manulife’s Specialty Drug Care program. The drugs in question target some very specific and often life-threatening conditions ranging from cancer to multiple sclerosis to even osteoporosis.
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Under the terms of the deal, Manulife’s coverage of said drugs will only apply to Loblaw pharmacies, though previously, the availability was somewhat wider. The reason? Manulife reps noted that the move was designed to “…move the program forward for the benefit of our customers and their employees” by choosing a single-source provider. There’s been significant outcry ever since from several groups, and regulators may ultimately get involved over issues of availability and competition.
Loblaw’s Changes on the Rise
This is just the latest in a string of changes made by Loblaw. For instance, it recently moved to get rid of a program that sold its nearly-expired food at a 50% discount. Consumer outcry once again stepped in, and now, Loblaw is retreating on that policy. That plan actually caused a member of Parliament, Alistair MacGregor, to call for investigations. Meanwhile, one plan that isn’t going away is Loblaw’s push toward electric vehicles in its logistics programs. Loblaw has another 25 electric semis on order with Tesla (NASDAQ:TSLA), which will double the current fleet loadout.
Is Loblaw Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on Loblaw stock based on four Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 14.3% rally in its share price over the past year, the average Loblaw price target of C$148.50 per share implies 10.4% upside potential.
