Back to top

Analyst Blog

On Dec 19, 2013, Zacks Investment Research downgraded CVS Caremark Corporation (CVS - Analyst Report) to a Zacks Rank #3 (Hold) from a Zacks Rank #2 (Buy).

Why the Downgrade?

Though the generic wave in the pharmaceutical industry is poised to be in favor of CVS, dwindling front-end sales reflect sluggish demand characterizing the U.S. economy. Intense competition and tough industry conditions act as major hurdles for the company. With Walgreen Co. (WAG - Analyst Report) and Express Scripts Holding Company (ESRX - Analyst Report) once again joining forces, we believe that CVS might lose some momentum in the coming days.

CVS Caremark reported third quarter adjusted earnings per share (EPS) of $1.05, beating the Zacks Consensus Estimate of $1.02 by 6.86%. CVS Caremark expects its adjusted earnings to be in the range of $4.36 to $4.50, reflecting a growth of 10.25% to 13.75% in fiscal 2014.

The persistent weak macro economic conditions could further hamper the growth prospects as the company is already facing pricing pressure and incurring high operating expenses due to increased competition particularly in the Pharmacy Benefit Management (PBM) and retail segments.

CVS Caremark has witnessed sharp downward estimate revisions for 2013 with 4 estimates going down in the past 30 days and no upward revision over the same time horizon.

The Zacks Consensus Estimate for 2013 decreased 0.25% to $3.96 per share over the last 30 days. However, the Zacks Consensus Estimate for 2014 rose to $4.47 from $4.46 over the same time frame, reflecting an increase of 0.22%.

Other Stocks to Consider

Currently, the stock carries a Zacks Rank #3 (Hold). Investors interested in the industry can look at Herbalife Ltd. (HLF - Snapshot Report),  which carries a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CENTURY ALU… CENX 22.53 +4.50%
ERBA DIAGNO… ERB 2.91 +4.30%
PLANAR SYST… PLNR 4.31 +3.86%
MALLINCKROD… MNK 72.17 +3.83%
GTT COMMUNI… GTT 12.06 +3.52%