) reached a new 52-week high of $52.63 on Wednesday, Jan 23,
2013. The stock continues to edge past resistance levels, beating
its previous 52-week high of $52.42 attained on Jan 17, 2013.
With a solid one-year return of 29.1% and a track-record of
posting in-line or higher quarterly earnings, this integrated
pharmacy service provider offers an attractive investment
The Stock Driver
A profound mix of favorable industry dynamics, solid guidance for
2013, benefits from the retention of
) customers from the earlier Walgreens-
) impasse and increasing shareholder value are driving CVS
Caremark. Further, management asserts that the company has
exceeded its financial goals for 2012.
With the worst flu season in a decade in the U.S., the rising
demand for vaccines at the largest provider of prescription and
related health care services is a lucrative opportunity to garner
incremental revenues. Further, demographic tailwinds should drive
utilization rates in the domestic market.
Notably, the introduction of generics in the pharmaceutical
industry has increased profitability at CVS Caremark. The company
envisages an upsurge in profitability for 2013 on the back of the
CVS Caremark's retail segment benefited from the recent fallout
between Walgreens and Express Scripts. The company witnessed a
record share gain in the recent past with 24 million script wins
in 2012. Despite the resolution of the impasse, management
commentary of retaining 60% of the prescription volumes gained
from the stalemate of these stalwarts is encouraging.
In the interim, CVS Caremark continues to reward its shareholders
via dividends and share repurchases. The company plans to
increase its dividend payout ratio to 25% (currently 21%) in 2013
and 30% through 2015.
In light of these facts, CVS Caremark envisages adjusted earnings
per share of $3.84 to $3.98 for 2013, reflecting year-over-year
growth in the band of 13.25% and 17.25%. The current Zacks
Consensus Estimate of $3.91 is the midpoint of the company's
The estimate revision trend reflects a bullish sentiment towards
CVS Caremark for 2013. The upward revision in Zacks Consensus
Estimate for 2013 over the last 60 days depicts ample positive
Accordingly, the stock carries a Zacks Rank #2 (Buy). Drug
Rite Aid Corporation
), carrying a Zacks Rank #1 (Strong Buy), also warrants a
CVS CAREMARK CP (CVS): Free Stock Analysis
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