Raymond James upgrades Oak Street on potential takeout by CVS

Raymond James analyst John Ransom upgraded Oak Street Health (OSH) to Outperform from Market Perform with a $35 price target following reports that CVS Health (CVS) is exploring a potential takeout of the company for a $10B enterprise value, which equates to $40 per share. The analyst ascribes a 70% probability that the deal goes through with a 30% chance no deal happens and the stock falls to $25. Oak Street shares should not retrace the move to $20 in a no deal scenario due to the company’s better than expected guidance on Monday, Ransom tells investors in a research note. With the stock at $30, the analyst believes the risk/reward is "positively skewed 2:1" with upside at $40 and downside at $25.