Pharmacy operator CVS Caremark (CVS) shares stumbled down more than 20% on Thursday morning after they reported earnings. The earnings themselves were just about what the street had expected with profit from continuing operations coming in at $.65 per share, besting estimates by one penny. However, the company revealed that their Caremark pharmacy benefits management unit lost $2 billion in business in the period. The lost contracts include such as large deals with New Jersey state Blue Cross plan and Ohio’s managed Medicare. Contracts such as these are a major loss for shareholders as they represent a steady stream of reliable income that adds to the stability of the pharmacy business. The President of the Caremark unit will step down and his responsibilities will temporarily be assumed by CEO Tom Ryan.

The quarter was otherwise pretty decent for CVS with revenue rising 18% to $24.64 billion, which was on pace with analysts’ expectations. Revenue at drug stores increased 17.9% which was aided by a 10% increase in flu related prescriptions, which the company expects to remain strong through the fourth quarter. Furthermore, same store sales were impressive, growing at a 5.7% rate. Net income was up 39% to $1.02 billion or $.72 per share, but there was also a reported eleven cent tax benefit. Management was prompted to lift the lower end of its full year earnings guidance range by two cents per share to $2.61 to $2.64.

“Let’s take a look at the other stories we’re following on the Closing Bell ticker tonight. Brewer Molson Coors reported its third quarter profit was up 37%. The company made $235 million due to higher selling prices and cost cuts. Well, that beat wall street expectations. Total global beer volume was down by nearly 3% as consumers did cut back on spending. The stock today down 8.5%.” — CNBC’s The Closing Bell 11/4/2009

Molson Coors Brewing Company (TAP) was unable to lift investors’ spirits after reporting better than expected profits in the third quarter. Analysts were expecting the Denver-based brewer and distributor to post EPS of $.98 instead the company reported a seemingly impressive $1.14 largely thanks to price increases and tax benefits. According to an analyst at UBS (UBS), the company would have earned about 97 cents per share were it not for the lower tax liability. The trouble from investors’ perspective was revenue fell 7.3% on declining volume, and management refrained from offering any encouragement to the market that volume would rebound.

“So why do we like Celgene so much, and how come we have time? The main reason I like it is its huge blood cancer drug Revlimid. $1.3 billion sales in 2008. It’s approved by the FDA to treat multiple myeloma. That’s a cancer of the plasma cells and bone marrow. These cancers are horrible…

This could be approved to treat more diseases, help more people and yes, make Celgene shareholders more money. There is a lot of momentum behind Revlimid. Sales are accelerating with several launches this year. Europe hitting the top line, gaining market share in the US. Up 3% in the last quarter over the previous one. Penetration still at only 34%. It’s about to launch in Canada and Latin America. Expected to launch in Australia late in the fourth quarter…

“…And GM really making real progress with the SUV’s. I mean, I have got to tell you, they have really come alive in that segment, they now lead Ford in that segment. Other winners just looking at everybody, not just GM, Cadillac is up. Ford Taurus sales up 41%. That’s a winner for Ford now and Mulally. The only Chrysler Model to be up month over month, 2008 to 2009 in October was the Dodge Caravan, sales of the Caravan were up 8%. All in all, guys, pretty good news for the auto sector this October.” — Fox Business Network 11/3/2009

Tuesday Warren Buffett announced his company, Berkshire Hathaway (BRK.A), would make its largest acquisition to date in Burlington Northern Sante Fe (BNI). When Warren makes a move, everyone takes notice. His affinity for this railroad operator has been no secret as he had steadily acquired a 24% stake in the company over the last few years, and now he is spending about $26 billion in cash and stock in order to buy up the rest of the company. In addition to the deal, valued at $100 per share Buffett will assume about $10 billion in debt, making the total value of the company in excess of $44 billion. This is a major move by any standard, and Buffett has said that this is essentially, “an all-in wager on the future of the U.S. economy.”

One of Buffett’s most famous sayings is, “the best time to sell as stock is never.” Clearly, Buffett sees a quality investment in the railroad industry and he sees rail as the way more goods will be transported throughout the U.S. in the future. He has believed in the power of rails for sometime as he acquired a railcar manufacturer and leaser last year in Union Tank Car.

“I thought the downgrade should have been made 20 points ago. You’ve got a 14 times earnings stock in the 50s. I’m not going to back away from it at this level. I’d rather buy it than sell it. It’s really down a lot.” — CNBC’s Mad Money 11/2/2009

Not much has been going right for Research in Motion (RIMM) investors recently with the stock down about 33% in just under 6 weeks time. The most recent sell-off was sparked by a downgrade to “Sell” from Citi (C) analyst Jim Suva related to stiffening competition particularly from smart phones running on Google’s (GOOG) Android operating system. The stock was down about 6% on Monday mainly due to this downgrade news.

For all the debate about possible reform to the U.S. medical system, it is easy to forget that the majority of major innovations in drugs and medical devices come from America. It is worth remembering that even with all the problems troubling the health care system, innovation continues to be a bright spot. Three of the biggest gains among individual stocks on Monday were from U.S. companies in the pharmaceutical sector largely because of this sort of innovation..

The biggest winner in today’s action are investors in Human Genome Sciences (HGSI) which is up more than 30% in afternoon trading following the completion of their second successful late stage clinical trials for a treatment of Lupus. We first wrote about this company after the completion of their first major trial on this drug in July (HGSI’s Lupus Drug Shows Great Potential), and the stock is up huge again after positive results for this difficult to treat disease. The stock is hitting multi-year highs above $24, and the stock is up more than 600% since the first trial was completed. With a lack of alternatives for those that suffer from Lupus, HGSI’s Benlysta could be a major source of revenue for the company if it can now get approval from regulators.

Once thought inconceivable, an interesting trend was uncovered in the October 29th The Wall Street Journal, there are a number of debt issuing firms foregoing the traditional credit rating process. In an article titled Credit Rating Now Optional, Firms Find, the Journal points out some globally prominent firms and governments have decided not to have their bonds and debt backed securities to be offered rated by any of the major credit rating agencies. Instead, these issuers are insisting that their investors do their own analysis of the cash flows and risks involved in each security.

This is a noteworthy trend as ratings from the major rating firms like Moody’s (MCO) and Standard & Poor’s (MHP) in some cases were seen as a rubber stamp authenticating debt and its associated risks. However, these agencies have come under scrutiny during the credit crisis as many of their ratings have been proven unreliable. Some would argue that the credit crisis exposed risks in highly rated debt issues that seemed to catch the agencies asleep at the wheel. The emergence of non-rated debt does suggest a lack of confidence or at least lack of necessity of these established guidelines. As the CEO of Italy’s Gruppo Campari was quoted as saying, “Our reputation is good….I don’t think a rating would have mattered that much.”

Times have rarely been tougher for the rental car industry than over the past year, but Dollar Thrifty Automotive Group (DTG) reported third quarter results that were actually encouraging. Profit jumped 59% in the quarter with net income coming in at $30.1 million or $1.29 per share versus last year’s $18.9 million. When excluding one-time events the results dropped to $1.19 per share, but on the whole they were still impressive as analysts were calling for $.79. The results were aided by lower costs, and the company said the worst is likely behind the industry. Furthermore, management expects rental revenue will show a year over year increase for the month of October, which is the first month to see gains since May of 2008.

Surely, the stock would get a boost after such an impressive quarter and upbeat outlook, right? Not exactly, Dollar Thrifty also reported that the company would be raising capital through a secondary offering. News of a rather large secondary offering has sent shares reeling, down more than 15% in afternoon trading. According to the statement, DTG plans to offer 5.75 million shares to the public, a move that would represent an increase to shares outstanding of about 26%. Clearly, the dilution to common shareholders makes this investment fundamentally less attractive.

Two weeks ago, Cramer made a point of telling a caller on his show that he believed Lockheed Martin (LMT) was the best bargain in defense (Lockheed Martin: Cramer’s Best Defense Stock). Specifically, here is what he said:

“Lockheed Martin is a buy. Now, a lot of people were disappointed by the last quarter, I say get a life. This is a company generating a gigantic amount of cash. It’s not expensive. It’s very well run. And as far as I’m concerned, this is the best bargain in the defense group. LMT, Lockheed Martin, pull the trigger right now.” — CNBC’s Mad Money 10/12/2009