For Immediate Release
Chicago, IL – April 19, 2010 – Zacks.com 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: General Electric Company (GE), First Horizon National Corporation (FHN), Genuine Parts Company (GPC), Santarus (SNTS) and Depomed (DEPO).
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Here are highlights from Friday’s Analyst Blog:
GE Beats on Lower Revs
General Electric Company (GE) announced earnings from continuing operations of 21 cents for the first quarter of 2010, ahead of the Zacks Consensus Estimate of 16 cents. Revenues were $36.6 billion for the quarter, down 5% from a year ago, which reflects the effects of GE Capital downsizing.
There were encouraging economic signs, including increases in airline passenger traffic and freight loadings, declines in receivables delinquencies, and growth in local advertising markets. The total value of company backlog ordering of equipment and services was constant from the prior quarter, at $174 billion.
GE Capital earned $0.6 billion in the quarter. Losses, delinquencies and non-earning assets declined in the quarter. At the same time, reserve requirements have increased. The company is initiating new business at attractive margins and its funding costs have declined.
Commercial real estate markets, however, continue to be challenging. During the first quarter, the company recorded incremental reserves related to the 2008 disposal of its GE Money Japan business, which is reflected in the financial figures concerning discontinued operations.
First Horizon Beats, Narrows Loss
First Horizon National Corporation (FHN) reported first quarter net loss of 12 cents, better than the Zacks Consensus Estimate of a loss of 16 cents. The company has also narrowed its loss from the prior-year period’s loss of 32 cents.
The better-than-expected results were primarily driven by a decrease in loan loss provisions. Additionally, expenses were lower in the quarter. However, the stressed economic conditions continue to remain an overhang on the company’s results. There was a weak demand for loans while fee income remained pressured as well.
Net loss available to common shareholders decreased to $27.7 million from a loss of $70.6 million in the prior quarter and a loss of $82.8 million in the year-ago quarter. Provisions for loan losses shrank to $105 million from $135 million in the prior quarter and $300 million in the year-earlier quarter.
Genuine Parts Inches Past Ests
Genuine Parts Company (GPC) has posted a 13% rise in profit to $100.6 million or 63 cents per share in the fourth quarter of 2009 from $89.2 million or 56 cents in the prior-year quarter. With this, the company has just exceeded the Zacks Consensus Estimate of 62 cents per share. Sales in the quarter rose 6% to $2.6 billion.
Besides the Automotive Parts segment, Genuine Parts’ Industrial Parts and Electrical/Electronic Material segments have shown an improvement during the quarter, driven by a revival in the market conditions. Both segments have been severely affected by the sluggish economy for the last several quarters.
Sales in the Automotive Parts segment increased 6% to $1.3 billion, the Industrial Parts segment escalated 9% to $803 million and the Electrical segment went up 16% to $100 million. However, sales in the Office Products segment slid marginally by 1% to $411 million.
Less Zegerid, More Glumetza
Yesterday, shares of San Diego specialty pharmaceutical company Santarus (SNTS) sank by 33% on news that a U.S. Federal Court for the District of Delaware has ruled that five patents covering the company’s Zegerid product are invalid due to obviousness.
Zegerid, the company’s flagship FDA approved product, is an immediate-release formulation that of omeprazole (Prilosec), a proton pump inhibitor (PPI), and one or more antacids for the treatment or reduction of the risk of a variety of upper gastrointestinal diseases and disorders, including gastroesophageal reflux disease (GERD). The product is currently on the market in a capsule (20mg and 40mg) and oral suspension (20mg) formulation. Generic drug manufacturer, Par Pharmaceuticals, has been seeking to bring a generic version of Zegerid to the market since 2007.
In mid-July 2009, the same U.S. Court of the District of Delaware ruled that Par’s proposed generic versions would infringe the five patents protecting Zegerid. Par appealed the ruling on claims of invalidity and inequitable conduct. A 30-month stay period on the capsule formulation expired in early February 2010.
The ruling yesterday effectively allows Par to launch a generic product of Zegerid after it received FDA approval of it abbreviated new drug application (ANDA). The news for Santarus is a clearly negative, as Zegerid accounted for 69% of the company’s total revenue in 2009.
All is not lost for Santarus, however. The company is looking to launch a newly approved tablet formulation of Zegerid with an improved pharmacokinetic, efficacy, and tolerability profile later this year. The company also possesses a phase III ready candidate in rifamycin SV MMX for traveler’s diarrhea. However, Santarus will still need to conduct two international multi-center, randomized, double-blind studies, each with roughly 300 patients, before it can file for approval.
At best, rifamycin SV MMX is still years from the market. Another pipeline candidate, budesonide MMX, designed for the treatment of mild-to-moderate ulcerative colitis, is also still a few years from the market.
Therefore, assuming Par receives FDA approval for a generic Zegerid in the near future, we believe that management at Santarus will beef up its efforts in selling the company’s other FDA approved prescription product, Glumetza, for the treatment of type 2 diabetes.
Glumetza is the market’s leading branded metformin product, with an estimated 31% total prescription share at the end of 2009. New prescription market share for Glumetza is even higher at 39%. Santarus believes it can deliver $50 million in Glumetza sales in 2010.
We have stated previously that we believe this guidance on Glumetza is conservative. If the company loses exclusivity on Zegerid before patients can be effectively transitioned over to the new tablet formulation, we believe management will refocus the sales force effort behind Glumetza even greater in 2010 than we previously forecasted.
This is clearly good news for Depomed (DEPO), the inventor of Glumetza. Depomed books all the revenues from Glumetza sales and pays 80% of the gross margin on the product to Santarus.
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