For Immediate Release
Chicago, IL – October 21, 2010 – Zacks Equity Research highlights: Royal Caribbean (RCL) as the Bull of the Day and CONSOL Energy (CNX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Morgan Stanley (MS), Abbott Laboratories (ABT) and Biogen (BIIB).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Royal Caribbean‘s (RCL) strategy to hedge fuel prices helped restrain the spike in fuel costs. Moreover, with robust booking momentum, we believe that the company is well positioned to drive solid operating leverage in the long run.
The company is also restructuring its business to increase fuel efficiency. Slower industry capacity growth in 2012 and beyond will allow the company to reap returns considerably.
Moreover, the company is approaching its fourth quarter, which is the holiday season and expected to generate considerable revenues. Hence, we upgrade the stock from a Neutral to an Outperform rating.
We have downgraded our recommendation on CONSOL Energy (CNX) to Underperform, primarily due to disappointing third-quarter coal production results.
Concerns regarding the formulation of stricter safety legislations and rigid penalties on underground mining, due to the recent Upper Big Branch mine incident, make our view negative for underground miners such as CONSOL.
We have downgraded our recommendation for CONSOL shares to Underperform from Neutral. Our $35 target price, 9.4x 2011 EPS, reflects this view.
Latest Posts on the Zacks Analyst Blog:
Morgan Stanley Beats, Revenues Down
Morgan Stanley‘s (MS) third quarter adjusted earnings from continuing operations came in at 23 cents per share, 4 cents ahead of the Zacks Consensus Estimate of 19 cents. This represents Morgan Stanley’s fifth consecutive quarter of income from continuing operations.
Adjusted earnings for the reported quarter leave out losses from changes in Morgan Stanley’s debt-related credit spreads of 30 cents per share and gain from a discrete tax item of 12 cents. Considering these non-recurring items, earnings from continuing operations came in at 5 cents compared with 50 cents in the year-ago quarter.
Including discontinued operations, Morgan Stanley reported a net loss of 7 cents per share, compared with a net income of 38 cents in the prior-year quarter.
Results were primarily affected by a decrease in the top line. Revenues for the reported quarter were negatively impacted by debt-related credit spreads. Weak performance in almost all of its businesses and a significant decrease in net interest income were also among the negatives. However, the results were aided by strong performance of Investment Banking and decrease in non-interest expenses.
Abbott Beats on EPS, Misses on Revs
Abbott Laboratories (ABT) reported third quarter earnings of $1.05 per share, a penny above the Zacks Consensus Estimate and towards the higher end of the guidance provided by the company. Earnings increased 14.1% from the year-earlier period. However, including one-time items, EPS declined 40% to 57 cents.
Although revenues grew 11.8% to $8.7 billion, they fell short of the Zacks Consensus Estimate of $8.9 billion. Revenues were negatively impacted by foreign exchange (Fx) fluctuations (1.0%) as well as the recall of the infant product Similac in September.
Performance by Segment
Pharmaceutical division sales were $4,937 million, up 21.7% (including a 1.6% negative Fx impact). Strong Humira and lipid franchise sales were offset by the weak performance of Kaletra, which declined 7.2% to $328 million. Pharmaceutical revenues included sales from the Solvay acquisition that closed in mid-February 2010.
The lipid franchise posted sales of $629 million during the quarter with TriCor/TriLipix sales increasing 22.1%. Meanwhile, Humira recorded sales growth in both the US (8.1%) and international markets (16.6%) during the quarter. The company reported that growth trends in the international anti-TNF market remained strong, with Humira maintaining a leading share in several markets.
Third quarter Humira sales increased 12.6% to $1.7 billion. Abbott Labs is working on expanding Humira’s label and is also seeking US and European approval of ABT-874 for the treatment of psoriasis.
The Nutritional business posted third quarter sales of $1,365 million, down 1.5%. Sales were impacted by the September 2010 recall of infant formula product Similac. Pediatric nutritional sales were down 9.3% during the quarter. Results were also impacted by tough year-over-year comparisons in international markets due to new product launches that occurred in the third quarter of 2009.
Abbott Diagnostics posted sales of $916 million in the quarter, representing an increase of just 0.8%. Meanwhile, the Vascular division continued to perform well, with sales increasing 18.6% to $790 million, thanks to strong growth in international markets. XIENCE V and XIENCE PRIME should continue performing well in Japan and Europe. Other division sales totaled $667 million, down 10.6%.
Abbott Labs Narrows EPS Guidance Range
Following the release of third quarter results, management raised the lower end of their previously issued 2010 earnings guidance by 3 cents. Abbott Labs now expects to deliver earnings in the range of $4.16 – $4.18 per share, representing double-digit growth. The Zacks Consensus Estimate currently stands at $4.16.
Abbott Labs also provided an update on its pipeline. The company stated that it expects to gain approval for 75 new products or additional indications in the next five years. Abbott Labs is working on boosting its vascular products portfolio and expects to launch several products in the next five years. These include the potential US launches of MitraClip, XIENCE PRIME and XIENCE Nano.
Meanwhile, the recent acquisition of Facet Biotech has helped strengthen Abbott Labs’ early- and mid-stage oncology portfolio. Abbott Labs is also working on strengthening its neuroscience portfolio and has several candidates in different stages of development for the treatment of diseases like schizophrenia, Alzheimer’s and multiple sclerosis. Abbott Labs, along with partner Biogen (BIIB), recently moved daclizumab into a phase III study for the treatment of relapsing-remitting multiple sclerosis (RRMS).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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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.
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ABBOTT LABS (ABT): Free Stock Analysis Report
BIOGEN IDEC INC (BIIB): Free Stock Analysis Report
CONSOL ENERGY (CNX): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
ROYAL CARIBBEAN (RCL): Free Stock Analysis Report
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