Caremark's Hefty Load

Caremark (CMX Quote - Cramer on CMX - Stock Picks) investors have seen their faith tested in the waiting room.

This week the giant pharmacy benefit manager will become the last of the big three PBMs to report quarterly results. Investors hope to see signs that its healthy growth will continue unabated.

Caremark investors have endured an emotional roller-coaster ride over the last month, fueled by wild swings in the results from the company's two largest peers. First, Express Scripts (ESRX Quote - Cramer on ESRX - Stock Picks) blew past Wall Street expectations and sent shares of all three players rocketing toward fresh highs. But then Medco (MHS Quote - Cramer on MHS - Stock Picks) followed up with disappointing results that hammered the company's stock and caused its competitors to lose some steam as well.

Caremark will finally get a shot at the driver's seat Tuesday. When it does, the company is expected to blaze forward with double-digit revenue growth and a 34% jump in earnings to 51 cents a share. And it will be relying on the familiar, yet powerful, combination of mail-order sales and generic drug penetration to drive those quarterly results.

Indeed, Wall Street expects such favorable trends to steer the company -- and, in fact, the entire PBM industry -- toward an even rosier future.

"The company is well-positioned to capitalize on increasing prescription cost trends, a mix shift toward mail-order distribution, the aging of the baby boomers and its significant specialty distribution presence," SunTrust Robinson Humphrey analyst David MacDonald wrote late last month. "Combine that with the pending patent expirations of several blockbuster drugs, potential incremental growth from the Medicare drug benefit and strong free cash flow, and the fundamental outlook is bright."

In the meantime, MacDonald fully expects Caremark to meet Wall Street's third-quarter expectations. As such, he currently has a buy recommendation and a $54 target price on the stock.

« Previous Page

1 2 3

Next Page »