Granted, that's always the concern at hand when a company reports solid earnings, as CVS did with earnings up 18% and revenue up 16%, both exceeding expectations.
But there's a caveat here.
Arch rival Walgreen (WAG) got into a contract dispute with Express Scripts (ESRX), which spelled temporary opportunity for CVS. The qualifier "temporary" is important because Walgreen and Express Script settled their quarrel.With the dispute put to bed, though, CVS says they will retain at least 50% of those customers formerly loyal to Walgreen. That seems a touch high, but what are their chances? What's their plan? Forbes and other media outlets, unfortunately, don't ask. They merely take CVS' claims as an article of faith -- which isn't good. Forbes' headline for example, assumes an ongoing cookbook-style formula for success. Just add water to those Walgreen customers and mix: "CVS' Prescription For Success: Record Sales, New Customers From Express Scripts Spat." Forbes eventually addresses the fact that the spat is settled, but dismisses outright the impact it might have on CVS. "That CVS expects to retain half of the customers should ease investors' worries about whether the boost would be short-lived," Forbes wrote. If only life were that simple: A company says what it expects and that forever quells investor concerns. Instead of referring to a CVS "prescription" in their headline, The Wall Street Journal mentions their "confidence," more subjective and possibly fleeting. The Journal then, rightly, talks about CVS's retention plan: a predictable grab bag of advertising and promotion that CVS's management trumpeted, before throwing down an appropriate line of caution: "The market isn't quite buying all that bullishness." That's better. CVS did well. But they still have to prove that those customers won't return to Walgreen in droves. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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