CVS Caremark
What analysts say:
- Buy, sell, or waffle? Eighteen analysts follow CVS. Fourteen are bullish, and the rest have a hold rating on the stock.
- Revenue. Analysts on average expect $20.6 billion in second-quarter sales, which is almost double last year's second-quarter sales amount. The jump is due primarily to the first-quarter acquisition of Caremark.
- Earnings. Analysts project quarterly earnings of $0.46, or 15% growth over last year's quarter.
What management says:
CVS and Caremark were together for a full 10 days last quarter, starting the formal process of integrating the largest drugstore chain by total store count with one of the largest PBMs. As a result, 2007 is expected to be an integration year, full of the customary merger integration charges. In other words, it will take some time before Fools can discern what CVS/Caremark will look like as a fully combined entity.
What management does:
As a pure drugstore operator, CVS had a stellar track record of same-store sales growth and successfully acquiring other chains to boost organic growth. Management is also known for its innovation -- it blazed a new health-care trail by combining retail drug sales with the mail-order focus of PBM Caremark. It is also beginning to roll out MinuteClinics at its CVS stores; MinuteClinics are quick-care clinics intended to compete with doctors and offer consumers a more convenient way to get a health checkup.
|
10/05 |
01/06 |
04/06 |
07/06 |
10/06 |
01/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
26.8% |
26.9% |
27.0% |
27.2% |
27.2% |
26.9% |
|
Operating |
5.5% |
5.5% |
5.7% |
5.7% |
5.7% |
5.7% |
|
Net* |
3.3% |
3.3% |
3.4% |
3.3% |
3.1% |
3.1% |
One Fool says:
CVS Caremark is already a reality, and the second quarter marks its first full quarter as a unified firm. However, it will still be some time before we see what the potential is, as it's too early to tell if managed-care giants such as UnitedHealth
In any case, the merger served as a warning to archrivals to innovate or die, and may be a key reason Walgreen
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UnitedHealth is both a Stock Advisor and Inside Value recommendation. These market-beating newsletters are both available for a free 30-day trial.
Fool contributor Ryan Fuhrmann is long shares of Walgreen but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
