For Immediate Release
Chicago, IL – August 5, 2009 – Zacks Equity Research highlights Durect Corp. (DRRX) as the Bull of the Day and Genzyme (GENZ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Caterpillar (CAT), Grainger (GWW) and Texas Instruments (TXN).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676
Here is a synopsis of all five stocks:
We are staying positive on Durect Corp. (DRRX) despite some recent setback and future challenges. Our investment thesis is based on the fact that we believe Remoxy will eventually receive approval in the U.S., and that management will secure another, potentially more lucrative, partnership on TRANSDUR-Sufentanil.
We are also optimistic on Posidur and believe that management will look to secure a partnership in the U.S. and Japan in 2009 or 2010. Finally, we are comfortable with the cash position given the current $42 million balance and all partnering opportunities available to management.
We are initiating coverage on Genzyme (GENZ) with an Underperform rating and a price target of $45. The company faced a major setback recently when its Allston, Massachusetts, manufacturing facility had to be shut down temporarily due to contamination issues. While the closure of the plant led to a loss of $13 million in second quarter revenues, we believe the major impact of the shutdown will be felt in the second half of the year.
Production of three key products, Cerezyme, Fabrazyme and Myozyme, will be affected by the plant shutdown. Sales of Cerezyme, which is a major contributor to the top-line, were already down in the second quarter of 2009 and we expect sales to be further impacted in the coming quarters. In fact, management slashed their guidance for Cerezyme to $750 million – $1 billion (previous guidance: $1.250 billion – $1.275 billion). Genzyme also reduced its guidance for Fabrazyme and Myozyme.
Latest Posts on the Zacks Analyst Blog:
Why Aren’t Profit Forecasts Higher?
Part of the problem is that second-quarter surprises are not translating into better second-half forecasts. Take Caterpillar (CAT), for instance. The company recently topped expectations by 51 cents per share. Yet the 2009 Zacks Consensus Estimate has only risen by 35 cents. Even if we use the more bullish, most accurate estimate of $1.52 per share, second-half profit projections have effectively been cut by 14 cents per share.
The other problem is the ongoing lack of visibility. Jim Ryan, CEO of Grainger (GWW), bluntly said last month that he has “not seen an indication of an economic turnaround.” If the economy is improving, surely Grainger would know, wouldn’t it?
But, for the sake of argument, let’s say Mr. Ryan was just being too conservative. After factoring in the 7-cent second-quarter earnings beat, full-year forecasts have been raised by a total of 6 cents, to $5 per share, or 1.2%. A company can increase earnings by 1% simply by watching costs.
Again, I ask, why aren’t profit forecasts higher?
Look, I don’t mean to rain on anybody’s parade. I love seeing stock market rallies. The economy is moving towards stabilization. And there are some companies with truly positive earnings estimate revisions, such as Texas Instruments (TXN).
But for many months, conventional wisdom has held that the economy will start to show growth in the second-half of the year. In other words, we’re getting the economic data that we more or less expected.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks “Profit from the Pros” e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=5508.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it’s your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5509.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com