RBC Capital downgrades CVS after profit warning

"The CVS investment case appears to be unravelling and we think the latest profit warning and reset to expectations is likely to leave investors on the sidelines for some time," it said.

CVS said on Tuesday that given its financial performance in the first half of 2019, it now expects full-year earnings before interest, taxes, depreciation and amortisation to be "materially below" current market expectations.

RBC said the deterioration in trading has been quicker and worse than expected.

"This is frustrating as we believe we had factored cost pressures into our model, but the continued weaker than expected performance from acquisitions and pricing pressures from pharma companies/suppliers on products (a new negative) are disappointing."

The bank said its thesis rested on CVS' ability to buy, integrate and achieve synergies to drive growth and this appears to be falling away.

"Whilst we see value in CVS' footprint and established network, the downward pressure on earnings could persist and hence the risk is too high for us to remain optimistic."

At 1550 GMT, the shares were down 4.1% at 384.40p.