) registered a steep rise of 4.31% on Wednesday following the
disclosure of a positive guidance for 2014 sales and earnings.
The company demonstrated its focus on enterprise growth and
underlined its commitment toward enhancing shareholders value.
On its annual Analyst Day at New York City, CVS Caremark declared
that it expects 2014 revenues to rise between 4% and 5.25% year
over year, with big gains in its pharmacy benefits management
business, mitigating softer growth at its drugstores.
Though the changing healthcare landscape poses challenges, CVS
foresees opportunities to further its long-term growth plan by
increasing earnings and revenues.
Further, the pending acquisition of one of the leading providers
of comprehensive infusion services - Coram, is expected to prove
beneficial for CVS. The acquisition should provide additional
areas of growth complemented by stronger offerings in the
Additionally, CVS Caremark's recently announced deal with
Cardinal Health, Inc
) to form one of the largest generic sourcing entities in the
U.S. is likely to launch in the second half of 2014. Such
developments are considered to favourably impact both volume and
efficiency. The two entities have recently renewed their existing
pharmaceutical distribution contract for three years through Jun
Taking into account these positive factors, CVS Caremark expects
its adjusted earnings for 2014 to be in the range of $4.36-$4.50,
reflecting growth of 10.25-13.75% from expected 2013 levels. It
also hopes to generate substantial free cash flow of $5.1 billion
to $5.4 billion, while cash from operations are expected to vary
in the range of $6.6 billion to $6.9 billion in 2014.
The recent approval by the board of directors to hike the
quarterly dividend by 22% to 27.5 cents per share reflects
management's confidence of delivering robust growth. CVS Caremark
also unveiled a new $6 billion share buyback program and plans to
complete $4 billion worth of share repurchases during 2014.
Further, CVS Caremark aims to lay greater focus on areas like
pharmacy benefit management (PBM) through new client wins along
with healthy absorption in existing health plans. Specialty
pharmacy is another promising revenue generator that CVS wants to
Moreover, to enhance its retail business, CVS is relying on its
strong network of strategically-located retail drugstores,
popularly called MinuteClinics, across the U.S. The company
expects these stores to give strong competition to pharmacy
CVS Caremark currently has a Zacks Rank #3 (Hold) but
) carries a Zacks Rank #2 (Buy).
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