Back to top

Press Releases

The Zacks Analyst Blog Highlights: CVS Caremark, Aetna, Universal American, Walgreen and Express Script

CVS AET UAM WAG ESRX

 ZacksTrade Now

For Immediate Release

Chicago, IL – November 16, 2011 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include CVS Caremark ( (CVS - Analyst Report), Aetna ( (AET - Analyst Report), Universal American Corp. ( (UAM - Snapshot Report), Walgreen ( (WAG - Analyst Report) and Express Script ( (ESRX - Analyst Report).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

Earnings Scorecard: CVS Caremark

Subsequent to the announcement of CVS Caremark’s ( (CVS - Analyst Report) third quarter 2011 results on November 3, 2011, we witness a mixed trend in the analysts’ estimate revisions.

Street analysts have had nearly a week to ponder over the news. In the subsequent paragraphs, we will cover the recent earnings announcement, subsequent analysts’ estimate revisions as well as the Zacks Rank and long-term recommendation on the stock.

Third Quarter Highlights

CVS Caremark reported EPS of 65 cents in the third quarter, up 8.3% year over year. However, after excluding the impact of certain one-time items, adjusted EPS came in at 70 cents, surpassing the Zacks Consensus Estimate of 67 cents and 9.3% higher than the year-ago level.

Net revenue increased 12.5% year over year to $26.7 billion, almost in line with the Zacks Consensus Estimate, primarily due to strong performance of the Pharmacy Services segment. The segment recorded a robust 25.8% increase in revenues to $14.8 billion during the reported quarter. The significant growth was primarily on the back of the long-term contract with Aetna ( (AET - Analyst Report) as well as the acquisition of the Medicare Part D business of Universal American Corp. ( (UAM - Snapshot Report).

Moreover, benefits from the company’s streamlining initiatives are expected to outweigh related costs in 2012. The company eyes further progress in the PBM segment based on its new business wins and strong client retention. By the end of the third quarter, the company completed more than 70% of 2012 renewals, which include AT&T, General Electric and a FEP Retail Contract worth $4 billion.

Based on a solid quarter, CVS Caremark updated its EPS outlook for fiscal 2011. The company now expects adjusted EPS of $2.77–$2.81 (earlier guidance being $2.75–$2.81). The guidance for cash flow from operations and free cash flow for fiscal 2011, however, remained unchanged at $5.5–$5.6 billion and $4.0–$4.2 billion, respectively.

For a full coverage on the earnings, read: CVS Posts a Strong Quarter

Agreement of Analysts

Estimate revision trends for the upcoming fourth quarter of fiscal 2011 and the first quarter of fiscal 2012 depicted the analysts’ mixed sentiments.

Over the past 30 days, 6 of the 16 analysts covering the stock have made downward revisions while 3 analysts raised their estimates for the fourth quarter. Besides, estimates for fiscal 2011 were raised by 13 analysts while none moved in the opposite direction. For the first quarter of fiscal 2012, only one analyst raised the estimate while 2 reduced the same.

After several quarters of declining revenues resulting from the disappointing results in the PBM segment, the analysts are encouraged by the improved performance of CVS Caremark’s Pharmacy Services segment for the third consecutive quarter.

Although concerns linger given the margin pressure, the analysts are confident about CVS Caremark’s longer-term potential, based on its retail execution, deployment potential and strong 2012 generics cycle. Moreover, the firms believe the healthcare reform will open up new avenues for the company. Alongside, CVS Caremark is looking to benefit from the ongoing Walgreen ( (WAG - Analyst Report)-Express Script ( (ESRX - Analyst Report) dispute for retail contract renewal. 

Magnitude of Estimate Revisions

In the past 7 days, the magnitude of estimate revisions for the fourth quarter of 2011, fiscal 2011 and first quarter 2012 remained unchanged at 89 cents, $2.80 and 63 cents, respectively.

Our Recommendation

During the third quarter of 2011, improved performance was observed in the Pharmacy Services segment for the third consecutive quarter. CVS Caremark is also adopting several strategies to ensure consistent growth in its business. We are encouraged by its several recent contract wins, which would help maintain the growth momentum in coming years. Also, the company intends to take advantage of the ongoing Walgreen-Express Script dispute, which if successful will further bolster its Retail segment. However, margins continue to remain under pressure. We reiterate a Neutral recommendation on the stock. 

CVS Caremark holds a Zacks #2 Rank, implying a short-term Buy rating on the stock. Besides, the company retains a long-term Neutral recommendation on the stock.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com

http://www.zacks.com

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

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 Zacks.com. 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
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIM'S P… PPC 31.52 +3.72%
CLAYTON WIL… CWEI 138.97 +3.55%
CALLON PETE… CPE 11.50 +3.14%
ACTELION LT… ALIOF 124.80 +2.97%