For Immediate Release
Chicago, IL – February 5, 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: MasterCard Incorporated (MA), Broadcom Corporation (BRCM), Allergan, Inc. (AGN), Medicis Pharma (MRX) and Johnson & Johnson (JNJ).
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Here are highlights from Thursday’s Analyst Blog:
MasterCard Misses Badly
MasterCard Incorporated’s (MA) fourth-quarter earnings (excluding special items) of $2.24 per share came in substantially below the Zacks Consensus Estimate of $2.47. However, this compares favorably with the earnings of $1.85 per share in the year-ago quarter. Earnings for the reported quarter included an after-tax severance charge of $0.19 per share.
The results for the reported quarter improved over the prior-year quarter due primarily to better pricing, an increased number of processed transactions and a lower tax rate. However, higher operating expenses as a result of increased personnel costs due to severance-related charges were the downside.
Over the last 7 days, four out of the 33 analysts covering the stock have increased estimates for full-year 2010, while none moved in the opposite direction. Currently, the Zacks Consensus Estimate for 2010 is a gain of $13.58 per share, which would be a 21.4% improvement over full-year 2009 earnings.
The absence of estimate revisions for 2010 in the downward direction indicates a likelihood of upward pressure on the performance of the stock in the upcoming quarters. However, the reported quarter’s earnings surprise is not reflected in the estimate revisions yet. As a result, the stock retains its Zacks # 3 Rank, which translates into a short-term Neutral rating. Also, considering the current fundamentals of MasterCard, we maintain a long-term Neutral recommendation on the stock.
Broadcom Exceeds Expectations
Broadcom Corporation (BRCM) reported revenues of $1.34 billion in the fourth quarter of 2009, up 7.1% from the prior quarter and up 19.2% from the year-ago quarter.
The sequential revenue growth in the quarter was a result of overall strength in broadband and enterprise businesses, which were up 14% and 18% respectively but partially offset by an expected seasonal decline in mobile and wireless business. The upside in revenue was driven by new product ramps, normal customer order patterns, and a better-than-expected holiday season along with strong demand from customers in Asia.
Gross margin came in at 53.1% compared to 50.5% in the year-ago quarter and 50.9% in the previous quarter. Product gross margin increased 240 basis points to 50.9% from 48.5% in the third quarter. Earnings per share (EPS) came in at 32 cents beating the Zacks Consensus Estimate of 23 cents.
Net revenue for 2009 was $4.49 billion, down 3.6% from a year ago.
Allergan Beats, Outlook Disappoints
Allergan, Inc. (AGN) reported fourth quarter earnings of 78 cents per share, a cent above the Zacks Consensus Estimate. While earnings increased 2.6% from the year-ago quarter, revenues increased 15.9% to $1,224.3 million. Allergan also declared a fourth quarter dividend of 5 cents per share.
Earnings for the full year came in at $2.78 per share, a cent above the Zacks Consensus Estimate and 8.2% above the year-ago period. Full year revenues increased 2.3% to $4,503.6 million.
Segment Performance
Specialty pharmaceuticals sales increased 17.7% to $995 million in the fourth quarter with full year sales increasing 5.2% to $3,683.8 million. Eye care pharmaceutical sales increased 21.2% during the fourth quarter. Strong performance of the Alphagan and Combigan franchise and products like Lumigan and Restasis helped drive eye care sales. New product Latisse contributed $26 million to fourth quarter sales.
Importantly, we were pleased to see Botox sales increase both on a sequential as well as a year-over-year basis. Botox sales came in at $347.7 million, up 5.6%. Botox sales had been declining during the past few quarters mainly due to weak consumer spending, concerns regarding its safety record, and increased competition in the form of Medicis Pharma’s (MRX) Dysport. Botox sales for the full year declined marginally (0.1%) to $1,309.6 million with therapeutic indications accounting for 52% of total Botox sales (up 4% compared to 2008).
Going forward, Allergan is looking to grow Botox sales by gaining approval for additional indications. The company has filed for U.S. Food and Drug Administration (FDA) approval of Botox for the treatment of chronic migraine.
Meanwhile, Allergan’s medical devices segment also showed a recovery with fourth quarter sales increasing 8.3% to $211.4 million. We believe that increased direct to consumer (DTC) effort and consumer spending during the holiday season helped revive medical device sales in the fourth quarter. While breast aesthetics sales increased 9.7% to $77.8 million, facial fillers sales increased a whopping 18.3% to $66 million. However, obesity intervention is yet to recover with sales declining 1.3% to $67.6 million.
Full year sales for the medical devices segment came in at $763.8 million, down 8.8%. The performance of this segment was affected by weak consumer spending and stiff competition from companies like Johnson & Johnson (JNJ) and Medicis with all three divisions in this segment reporting a decline in sales in 2009. While breast aesthetics and facial aesthetics declined 7.3% and 5.7%, respectively, obesity intervention recorded the highest decline with 2009 sales coming in at $258.2 million, down 12.8%.
Earnings Outlook Disappoints
Allergan provided detailed guidance for 2010. The company expects earnings in the range of $3.09 – $3.15 per share on total product net sales in the range of $4,550 million – $4,750 million. Other revenues are expected in the range of $60 million. The earnings outlook was disappointing as the Zacks Consensus Estimate of $3.14 is already towards the higher end of the earnings guidance.
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