Home » Caveat Emptor Perspective » $CVS Big Promises but read and listen to the fine print/talk that goes with it. Political not financial.

$CVS Big Promises but read and listen to the fine print/talk that goes with it. Political not financial.

CVS/pharmacy

Image by Studio Mohawk via Flickr

CVS Caremark (NYSE:CVS) confirmed 2011 guidance and issued 2012. In the context of a 30% dividend increase the executive team was sounding very positive. Also cash flow is improving and billions of dollars will be spent buying back shares and financially engineering higher EPS. But just read this verbiage from President and CEO Larry Merlo

CVS Caremark will continue to deliver innovative solutions that lower costs for payors and provide increased access, lower costs and better health outcomes for patients.”

That basically is all things to all men. Very hard to do. Many will claim impossible. So why promise this nonsense to investors who most likely know better? Healthcare is highly politicized. Drug costs really do not go down. Larry Merlo is positioning himself and CVS in front of politicians. CVS most likely has pharmacies in every congressional district. He simply has to look good and curry favour from both sides of the house.

When investing in CVS Caremark investors need to remember the political wild card risks.

George Gutowski writes from a caveat emptor perspective.