• Bank of America/Merrill (NYSE:BAC) downgraded a number of semiconductor companies, expecting a modest inventory correction, even as economies improve and demand for electronics rises.  Four shares were downgraded to neutral, including Intel (NASDAQ:INTC), Texas Instruments (NYSE:TXN), Marvel Technology Group (NASDAQ:MRVL) and LSI Corp (NYSE:LSI).  The form lowered Maxim Integrated Products (NASDAQ:MXIM), National Semiconductor (NYSE:NSM), Power Integrations (NASDAQ:POWI) and Microchip Technology (NASDAQ:MCHP) to underperform

• Advanced Micro Devices (NYSE:AMD) rose 10.6% yesterday. The firm announced a private debt offering of $500 million of senior notes. This morning's news saw FBR Research raising its price target to $9 from $8, while maintaining a "market perform" opinion

• Goldman Sachs (NYSE:GS) reiterated its "buy" rating on CVS Caremark (NYSE:CVS), saying the shares are cheap at current levels.  The firm said at $30, CVS is selling at just 10.6 times 2010 estimates, below a two year, 14x average, with long-term growth of 13% anticipated

• Reports

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CVS Caremark’s (CVS) third-quarter earnings came in at 65 cents, a cent above the Zacks Consensus Estimate and higher than 60 cents reported in the year ago period. Revenues increased 18.2% year over year to $24.6 billion primarily due to robust growth of both segments - pharmacy services and retail pharmacy. However, gross margin declined to 20.3% in the reported quarter compared to 21.1% in the year ago period.

We are pleased to see the robust performance of the pharmacy services segment during the reported quarter. Revenues increased 23.4% to $13 billion. Revenue growth would have been higher at 27.2% but for the recent generic introductions. While pharmacy netwok claims processed during the quarter increased 9% year over year to 146.5 million due to the addition of RxAmerica claims and new client wins, offset partially by a reduction in claims due to the termination of two large contracts (effective beginning

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• Cisco Systems (NASDAQ:CSCO) reported better-than-expected first quarter adjusted earnings of 36 cents a share, versus 37 cents a year ago, beating Zacks estimates of 26 cents a share.  Revenues of $9 billion, though off last year's $10.3 billion, exceeded Zacks projections of $8.75 billion. Current quarter revenue guidance was lifted to 1%-4% growth from a year ago to $9.9 billion-$10.2 billion.  CEO John Chambers said the numbers "continued to reflect strong sequential growth trends," as he noted an improving economic outlook

• Toyota Motor (NYSE:TM) reported a surprise quarterly profit and halved its annual loss estimate as both its revenue and cost-cutting expectations beat estimates after vehicle demand grew in the US and Asia. The company said it now sees a $2.2 billion loss for its fiscal year ending March

• Costco Wholesale (NASDAQ:COST) reported same-store-sales rose 5% in October, ahead of estimates of a 4.7% gain, as a weak dollar

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BioScrip, Inc. (BIOS) reported third-quarter earnings of 14 cents per share, beating the Zacks Consensus Estimate of 10 cents. The company reported earnings of 6 cents in the year-ago period. Although earnings were better than expected, revenues declined 7.2% to $333.5 million. While the specialty business contributed $279 million to revenues, the pharmacy benefit management (PBM) business posted revenues of $54.5 million.   The decline in revenues was mainly due to the elimination of the Medicare Competitive Acquisition Program and the termination of the United Health Group organ transplant and HIV/AIDS contracts. This was partially offset by increased sales of higher margin infusion therapies and other specialty sales.   The company reported a sequential growth of 3% in specialty sales with several therapeutic areas like iron overload, multiple sclerosis (MS), oncology and infusion therapies recording double digit growth from the year-ago period. The oral oncology business should continue ...

For Immediate Release

Chicago, IL – August 6, 2009 – Zacks.com releases the latest Zacks Industry Rank. Stocks featured in this week’s analysis include CVS Caremark (CVS), Life Technology (LIFE), NuVasive, Inc. (NUVA), Sepracor (SEPR), Gilead Sciences (GILD) and Health Care SPDR (XLV).

Zacks Industry Rank Analysis is written by Charles Rotblut, CFA, Senior Market Analyst for Zacks.com.

This week: One Sector With Revenue Growth

Yesterday, CVS Caremark (CVS) credited strength in pharmacy services and pharmacy sales for increasing second-quarter earnings. The company reported 22.1% revenue growth in its pharmacy services segment and 7.5% growth in pharmacy same-store sales.

CVS Caremark's earnings were notable not only for surpassing expectations (65 cents per share versus the Zacks Consensus Estimate of 64 cents), but because they were driven by revenue growth. Many companies have relied on cost-cutting, not revenue growth, to push earnings

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Yesterday, CVS Caremark (CVS) credited strength in pharmacy services and pharmacy sales for increasing second-quarter earnings. The company reported 22.1% revenue growth in its pharmacy services segment and 7.5% growth in pharmacy same-store sales.

CVS Caremark's earnings were notable not only for surpassing expectations (65 cents per share versus the Zacks Consensus Estimate of 64 cents), but because they were driven by revenue growth. Many companies have relied on cost-cutting, not revenue growth, to push earnings above expectations.

The reason I mention CVS is because Medical is the one sector where I'm seeing several companies growing revenues on a year-over-year basis. The reason is that drugs and medical supplies are less economically sensitive than most other products.

Medical stands out for the large number of earnings estimate revisions. Over 900 full-year profit forecasts have been raised over the last 4 weeks. More than half of these revisions are

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• Toyota (NYSE:TM) reported a June quarter loss of $819 million, reflecting sluggish US sales and a stronger yen, which offset cost-cutting measures and inventory decreases; however, the firm cut its loss forecast on the year by about 18% to $4.7 billion

• Xstrata, the world's fifth largest diversified mining group, reported a 77% fall in six month results to 38 cents a share adjusted from $1.66, although above estimates of 33.6 cents

• UBS (NYSE:UBS) reported a higher-than-expected second quarter loss of $1.32 billion, which was less than the prior quarter loss. The bank's Tier 1 capital ratio rose to 13.2% at quarter's end from 10.5% at the beginning of the quarter

• Vulcan Metals (NYSE:VMC) reported a second quarter earnings of 14 cents, ex-items, versus estimates of 20 cents a share, as revenues fell 29.3% from a year earlier to $721.9 million, off estimates of $759.1 million. The firm said it

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The outlook for the drug store industry is negative. Although the demographics of an aging U.S. population are favorable for the prescription drug industry, the outlook for pharmacies remains clouded due to several influences on the industry.

Competition will remain stiff in the pharmacy segment as other retail businesses continue to add pharmacy departments and as other low-cost pharmacy options come on-line. Discount retailers, in particular, have made substantial inroads in gaining market share during the last year. The trend toward generic drugs, while providing better margins for retail pharmacists, is expected to slow over the next year. In addition, various drug re-importation schemes have been proposed by large employers and state and local governments in an effort to manage escalating healthcare costs.

Clouding the outlook further is the legislation that provides drug benefits under Medicare. Real GDP declined 6.3% in the fourth quarter of 2008, and the

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UBS is out with an interesting negative call on athenahealth (NASDAQ:ATHN) saying they were disappointed to discover that CVS is planning to close about 90 of its MinuteClinics on a seasonal basis. They view the MinuteClinics as still a relatively young business model, and in light of a benign flu season and a weak economy they think CVS mgmt may be fundamentally reassessing the consumer demand for this service. Accordingly, they think this could be a negative read to the other retail clinic providers with which ATHN does business, such as RediClinics. Scaling back of MinuteClinics may portend broader economic pressures By itself, the firm does not believe this news requires a major reduction to their near-term earnings projections. They think the real downside for ATHN is more the general uncertainty about the prospects ...

With good returns so far since I profiled Caraco Pharma (CPD) as a defensive growth stock at a value price, a related company in the ETF Innovators [ETFI] Global Healthcare Cost Containment Index with similar value parameters is Home Diagnostics (HDIX) – which makes affordable blood glucose monitoring systems and disposable testing supplies [web link to HDIX product page] under its own brand names (such as TRUE and Prestige) and co-branded partnerships with leading retail pharmacies such as Rite Aid (RAD), Walgreen (WAG), and CVS Caremark (CVS) as value-priced, store-branded products. The accompanying 3-year chart [click to enlarge] illustrates that HDIX has lost more than half of its market value since its IPO in late 2006, underperforming both the Healthcare ...