CVS Caremark Corporation
) is scheduled to report its first-quarter 2014 results before
the opening bell on May 2. Last quarter, CVS Caremark posted a
positive earnings surprise of 0.90% while the four-quarter
trailing average beat is pegged at 3.47%. Let's see how things
are shaping up for this announcement.
Factors at Play
CVS Caremark is poised to benefit from a strong selling
season, favorable industry dynamics and increasing shareholder
value. The company also witnessed robust double-digit growth in
Pharmacy Benefit Manager (PBM) on the back of a strong selling
The generic wave in the pharmaceutical industry continues to
work in CVS Caremark's favor, as evident in the consistent margin
expansion at the company. We are also impressed with CVS'
apparently strong guidance for 2014 where adjusted EPS reflects
strong year-over-year growth along with the company's optimism
about its future.
However, CVS is facing higher costs associated with its
Medicare Part D business that might hamper operating profit in
the PBM franchise.In addition, the decline in front-end sales was
also disappointing in the last reported quarter.
Our proven model does not conclusively show that CVS Caremark
is likely to beat earnings this quarter. It is because a stock
needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for
this to happen. That is not the case here as you will see
CVS Caremark's earnings ESP is 0.00%, as the Most Accurate
estimate and the Zacks Consensus Estimate both stand at
Although CVS Caremark's Zacks Rank #2 (Buy) increases the
predictive power of ESP, when combined with a 0.00% ESP, it makes
surprise prediction difficult. We caution against stocks with
Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings
announcement, especially when the company is seeing a negative
estimate revision momentum.
Other Stocks to Consider
Here are two companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
Myriad Genetics Inc.
) has an earnings ESP of +10.87% and sports a Zacks Rank #1
(Strong Buy). Myriad Genetics will be reporting first-quarter
earnings on May 6.
LDR Holding Corp.
) has an earnings ESP of +26.32% and holds a Zacks Rank #2 (Buy).
LDR Holding will announce its first-quarter 2014 earnings on May
We note that,
Align Technology Inc.
), which surpassed our first-quarter 2014 earnings estimate on
Apr 23, had an earnings ESP of +13.89% and carried a Zacks Rank
#1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
CVS CAREMARK CP (CVS): Free Stock Analysis
LDR HOLDING (LDRH): Free Stock Analysis
MYRIAD GENETICS (MYGN): Free Stock Analysis
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