CVS Caremark Backs 2012 Outlook, Guides 2013 EPS Above View, Boost Dividend 38%

Drugstore chain CVS Caremark Corp. (CVS) on Thursday reaffirmed its guidance for the full-year 2012, and provide initial earnings guidance for the full-year 2013, above Street view. The company also boosted its quarterly dividend by about 38 percent.

The company revealed this at its annual Analyst Day in New York City while highlighting a healthy outlook for growth across the enterprise.

"Going into 2012, we set challenging, yet achievable, financial targets and I am pleased to report that we outperformed those expectations. Earnings per share and cash flow are expected to be solidly ahead of our initial plan. These strong results set the stage for continued enterprise growth in 2013 and beyond," President and CEO Larry Merlo said in a statement.

The Woonsocket, Rhode Island-based company said it continues to expect fiscal 2012 earnings in a range of $3.38 to $3.41 per share.

On average, 20 analysts polled by Thomson Reuters expect the company to report earnings of $3.40 per share for fiscal 2012. Analysts' estimates typically exclude special items.

Looking ahead to fiscal 2013, the company expects to deliver adjusted earnings from continuing operations in a range of $3.84 to $3.98 per share. Wall Street analysts currently have a consensus earnings estimate of $3.82 per share.

CVS Caremark also expressed confidence in the company's ability to achieve the steady state earnings growth targets established in late 2010, for 2011 through 2015.

Further, the company said its anticipates generating substantial free cash flow of $4.8 billion to $5.1 billion, and cash from operations of $6.4 billion to $6.6 billion in 2013. The guidance assumes the completion of $4 billion in share repurchases during 2013.

Additionally, the company said its board has approved an increase in its quarterly dividend of about 38 percent to $0.225 per share on the common stock of the company, payable on February 4 to holders of record on January 24, 2013.

"Today's increase allows us to meet our 25% dividend payout ratio target two years early and marks our tenth consecutive year of dividend increases," CFO Dave Denton noted.

CVC closed Wednesday's regular trading session at $47.54, down $0.13 on a volume of 6.02 million shares. In the past 52-week period, the stock has been trading in a range of $36.44 to $49.23.

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