For Immediate Release
Chicago, IL – October 14, 2009 – Zacks Equity Research highlights VimpelCom (VIP) as the Bull of the Day and Rite Aid Corporation (RAD) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Johnson & Johnson (JNJ), Elan Pharmaceuticals (ELN) and Gilead Sciences, Inc. (GILD).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2676
Here is a synopsis of all five stocks:
We reaffirm our Outperform recommendation for VimpelCom (VIP), Russia’s second largest cellular carrier with over 25% market share. Reported earnings in the last quarter outpaced the Zacks Consensus Estimate, driven by foreign exchange gains.
We continue to be intrigued by VimpelCom’s successful sales growth trend and its ability to retain subscribers on a recurring basis, even as overall economic factors remain weak. The company is also progressing well in expanding its 3G wireless and residential broadband network deployments, as reflected by healthy subscriber accretion in the last quarter.
Additionally, the ongoing expansion initiatives into emerging Asian markets (including Cambodia and Vietnam) are expected to boost opportunity in wireless, given the lower mobile penetration levels in these regions.
Management at Rite Aid Corporation (RAD) was executing a turnaround strategy centered on increasing the profitability of the existing store base.
However, the acquisition of Brooks Eckerd prior to a convincing turnaround in profitability has increased the debt burden and interest expense.
Moreover, Wal-Mart’s foray into the retail generic drug market has pressured the company’s pharmacy margin. Given the weakness of front-end sales and management’s continual lowering of EPS guidance (for larger net losses), the stock’s rating remains Underperform.
Latest Posts on the Zacks Analyst Blog:
J&J Beats & Raises Guidance
Johnson & Johnson’s(JNJ) third quarter earnings of $1.20 surpassed the Zacks Consensus Estimate by 7 cents and by 3 cents from the year-ago period.
However, the company reported revenues of $15.1 billion, a decline of 5.3% compared to the third quarter of 2008. While 2.8% of the decline in revenue was due to operational factors, foreign exchange movement was responsible for the remaining 2.5% decline. Sales in both domestic and international markets recorded declines of 8.1% and 2.5%, respectively.
Johnson & Johnson’s diversified business model is helping the company pave its way through tough situations. For the second quarter in a row, the company’s medical devices segment posted higher revenues than the pharmaceuticals. While medical devices recorded an increase of 2.3% compared to the year-ago period, consumer products and pharmaceuticals recorded a year-over-year decline of 2.7% and 14.1%, respectively.
While generic competition was primarily responsible for the decline in prescription drug business, unfavorable currency movements hampered sales of consumer products and medical devices.
For the pharmaceuticals segment, domestic and international sales declined 19.2% and 7.1%, respectively reflecting an operational decrease of 1.9% and a negative currency impact of 5.2%. Drugs such as Topamax (76% decline), an antiepileptic and a treatment for migraine, and Risperdal (40% decline), an antipsychotic medication, were negatively impacted by generic competition.
The company recently acquired an 18.4% stake in Elan Pharmaceuticals (ELN) for $885 million and an additional $500 million for its Alzheimer’s disease pipeline. Additionally, J&J entered into a licensing and collaboration agreement with Gilead Sciences, Inc. (GILD) for the development and commercialization of a new fixed dose combination of investigational compound TMC278 (rilpivirine hydrochloride 25 mg) and Gilead’s Truvada (emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) for treatment-naive adult patients with HIV-1. We believe J&J will look for such opportunities in the near future to boost its pharmaceuticals revenues.
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.
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