CVS Caremark Corporation (NYSE: CVS) is enjoying a 6% jump higher today on the heels of this morning's earnings report. The pharmaceutical retailer banked $935 million (65 cents per share) during the fourth-quarter reporting period. This is up nearly 17% from earnings in the year-earlier period. Adjusted for items, CVS earned 70 cents per share in the quarter on $24.14 billion in revenue. These figures edged out analysts' expected per-share earnings and revenue of 69 cents and $23.29 billion, respectively.
Pharmacy revenue edged 1.5% higher while retail drugstore revenue surged 18.8%. This last figure was the most surprising one in this climate of penny-pinching. Health and beauty aids, foodstuffs, and other products on CVS shelves tend to be priced slightly higher at drugstores as opposed to discount chains. But you can't put a price tag on convenience, and it's clear consumers are still hitting drugstores for more than just their prescriptions.
Options traders today have taken an interest in the CVS January 2010 30-strike call (WSAAF). More than 3,000 contracts have already changed hands on this slightly out-of-the-money position that expires in about 11 months. Heading into today, open interest on this LEAPS position was 5,266. The option is currently bid $3.70, asked $4.00,
Beth Gaston Moon works for WeSeed.com. The above comments are not intended as trading or investment advice.
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Reader Comments (Page 1 of 1)
2-20-2009 @ 1:18PM
Iridium said...
CVS's profits jumped becuase of the creation of a near monopoly in prescription drugs through many top insurance plans.
If you can't buy prescription drugs from other pharmacies through your insurance then you'll just go to CVS.
CVS then has free reign to raise prices on the drugs they carry to increase profits.
Its a great manipulated market. CVS caremarke should be shut down by the government. I feel like suing them right now.
4-09-2009 @ 3:32AM
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