HSBC recently initiated coverage of CVS Health (NYSE:CVS) and Walgreens Boots Alliance (NASDAQ:WBA) in a client note on Friday.

For CVS Health, HSBC assigned a Buy rating with a price target of $94 per share. The bank views CVS as having an attractive and undervalued competitive advantage and noted that it is trading at a significant discount compared to its historical levels. Additionally, HSBC pointed out that CVS's shares have declined about 18% over the last twelve months (LTM), in contrast to the S&P 500 Index, which has risen by 23% during the same period. This discrepancy leads HSBC to believe that the sell-off in CVS's stock might be excessively severe.

On the other hand, Walgreens Boots Alliance was given a Hold rating with a price target of $27 per share. HSBC acknowledged that WBA requires enhanced operational discipline to improve its execution and overall performance, with a particular focus on restoring profitability. Despite facing near-term operational challenges, HSBC sees potential for WBA to unlock value. However, the analysts cautioned that the risks associated with execution are significant.