The Zacks Analyst Blog Highlights: Cisco Systems, CVS Caremark, ResMed, Medical Action and MedAssets

Feb 14, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Feb. 14, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Cisco Systems (Nasdaq: CSCO), CVS Caremark (NYSE: CVS), ResMed (NYSE: RMD), Medical Action (Nasdaq: MDCI) and MedAssets Inc (Nasdaq: MDAS).


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Here are highlights from Wednesday's Analyst Blog:

Cisco Beats with Record Earnings, Revs

This current earnings season has not been much to write home about for stocks in the Tech sector. But after the bell Wednesday, tech giant Cisco Systems (Nasdaq: CSCO) handily beat EPS estimates, with earnings of 47 cents per share (accounting for stock-based compensation) on revenues of $12.1 billion, which was a tad better than, but mostly in-line with, expectations. These are both all-time records for Cisco.

Cisco develops routers and switchers that make up the architecture of the Internet. The company cited the coming together of its various growth businesses -- cloud computing, mobile, data center, etc. -- as assisting this impressive performance, especially in light of a difficult environment for tech, in general. Reference the many big-time tech firms that missed expectations in the quarter.

Posting a 9.3% positive earnings surprise means Cisco has now beaten expectations for at least the past 5 quarters straight. It's Cisco's 8th straight record revenue total, and net income in the quarter was $2.7 billion, which was also above expectations.

Analysts were absolutely dormant in estimate revisions this quarter: 43 cents per share was expected 90 days ago, and 43 cents was expected before the earnings report. Cisco CEO John Chambers has been known to downplay guidance estimates, which is a good way to consistently maintain positive earnings surprises each quarter. Two analysts had revised upwards their estimates for next quarter and fiscal 2013 in the past week, and it is largely for this reason Cisco currently has a Zacks Rank #2.

CVS Broadens Pharmacy Advisor

CVS Caremark (NYSE: CVS) recently extended its innovative Pharmacy Advisor program to cover five additional chronic conditions, namely asthma, depression, osteoporosis, breast cancer and chronic obstructive pulmonary disease.

These condition-based programs are an interventional measure to inform pharmacists when patients are non-adherent to their medication regimen or have suffered a gap in care. Prior to the extension, CVS's Pharmacy Advisor was directed at diabetes and cardiovascular conditions, with more than 3.8 million interventions to date.

CVS witnessed an additional uptake in Pharmacy Advisor program in 2012 and the recent extension reflects its high success rate. The extension should further drive adoption rates by increasing the number of lives covered under Pharmacy Advisor. This is likely to increase the profitability of CVS going forward.

The Need for Pharmacy Advisor According to estimates, medication non-adherence costs the U.S. economy up to $300 billion annually. Studies reveal that low medication adherence is associated with chronic conditions. Further, the incidence of medication persistence (length of time a patient continues to take a prescribed drug) is lower for individuals with chronic diseases.

As per the New England Healthcare Institute, medication adherence programs for individuals can reduce healthcare costs and improve patient outcomes. Further, a study published in the Health Affairs journal suggests that intervention by pharmacists can reduce gaps in care. In light of these facts, the extension of Pharmacy Advisor should improve medication adherence for chronic conditions across the U.S.

Our Rank

The extension of the Pharmacy Advisor is the latest addition to CVS's several near-term growth drivers. With a favorable selling season, its fourth-quarter and annual results sailed past the corresponding Zacks Consensus Estimates. The company's forecast for 2013 also encourages market sentiments.

Given this backdrop, the estimate revision trend for CVS reflects a bullish sentiment. Consequently, the stock carries a Zacks Rank #2 (Buy). Besides CVS, ResMed (NYSE: RMD), Medical Action (Nasdaq: MDCI) and MedAssets Inc (Nasdaq: MDAS), carrying a Zacks Rank #1 (Strong Buy) are expected to do well.

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