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The Zacks Analyst Blog Highlights: Valeant Pharmaceuticals, Actavis, Mylan, Avanir Pharmaceuticals and Hanesbrands



 The Zacks Analyst Blog Highlights: Valeant Pharmaceuticals, Actavis, Mylan,
                    Avanir Pharmaceuticals and Hanesbrands

PR Newswire

CHICAGO, April 9, 2013

CHICAGO, April 9, 2013 /PRNewswire/ -- 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 Valeant Pharmaceuticals
(NYSE:VRX), Actavis Inc. (NYSE:ACT), Mylan's (Nasdaq:MYL), Avanir
Pharmaceuticals Ltd. (Nasdaq:AVNR) and Hanesbrands Inc. (NYSE:HBI).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Get the most recent insight from Zacks Equity Research with the free Profit
from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday's Analyst Blog:

Valeant Inks Deal with Actavis

Valeant Pharmaceuticals (NYSE:VRX) recently entered into an agreement with
Actavis Inc. (NYSE:ACT). As per the agreement, effective immediately, Actavis
will exclusively market and distribute an authorized generic of Valeant's
Zovirax ointment. 

The agreement allows Actavis to record all the net sales of the generic
ointment while Valeant will receive a share of the same. The other terms of
the agreement were not disclosed.

Actavis will also have the exclusive rights to co-promote Zovirax cream to
obstetricians and gynecologists in the US by using its existing Specialty
Brands sales and marketing structure.

In return, Valeant gained exclusive right to co-promote Actavis' Cordran Tape
(flurandrenolide) in the US, which is indicated for treating inflammation and
itching caused by skin allergic reactions, eczema and psoriasis.  

Valeant will co-promote the drug using its dermatalogy sales and marketing
structure for a co-promotion fee on sales.

We note that Zovirax (ointment) is indicated for the management of initial
genital herpes and limited non-life threatening mucocutaneous herpes simplex
infections in immuno-compromised patients.

Zovirax cream is indicated for the treatment of recurrent herpes labialis
(cold sores) in patients above 12 years.

We believe that Valeant is now making efforts to somewhat offset the adverse
impact of Mylan's (Nasdaq:MYL) recent launch of the first generic version of
Zovirax ointment.

Mylan recently received approval from the US Food and Drug Administration
(FDA) to sell the first generic version of Zovirax ointment.

Consequently, Valeant cuts its earnings guidance for 2013 as Zovirax accounted
for 7% of Valeant's total revenue in 2012. Valeant estimates the launch of
Mylan's generic version to adversely impact its bottom line on a cash basis by
30 to 40 cents in 2013.

Concurrent with the fourth quarter results in Feb 2013, Valeant reaffirmed its
guidance provided in January. Earnings per share were then projected around
$5.45 – $5.75.

Valeant intends to provide an updated guidance in May along with its first
quarter 2013 results.

It remains to be seen if Valeant is able to shield its top-line growth
following the entry of generics.

Valeant currently carries a Zacks Rank #3 (Hold). Right now, Avanir
Pharmaceuticals Ltd. (Nasdaq:AVNR) looks better positioned with a Zacks Rank
#2 (Buy).

Hanesbrands Initiates Dividend

The leading apparel retailer, Hanesbrands Inc. (NYSE:HBI), announced that it
will initiate its dividend payback policy. In the recently held Investor Day
conference call, the company announced that it will pay a regular quarterly
dividend of 20 cents per share starting from June 3, 2013 to stockholders of
record at the close of business on May 20, 2013. The annualized dividend per
share stands at 80 cents per share. The dividend yield is 58.6%.

The initiation of the quarterly dividend is a part of the company's cash
deployment strategy. The apparel chain is settled in a solid free cash flow
position with a price to free cash flow ration of 10. Hanesbrands intends to
use almost 20% to 25% of its free cash flow to pay dividend.

Winston-Salem, NC-based Hanesbrands is geared to maximize returns to
shareholders. Apart from paying in the form of dividends, the company also
intends to repurchase shares, although it is yet to formulate its share
buyback strategy.

Signs of economic recovery have made share buybacks and dividend increases a
common factor among companies with ample cash. Apart from enhancing
shareholders' return, an attractive dividend payment strategy lifts the market
value of the stock.

In the conference call, Hanesbrands highlighted its Innovate to Elevate
Strategy as a part of boosting its earnings. The Innovate to Elevate strategy
aims at using product innovation to enhance the brand value of the company.
The company also revealed that apart from paying dividends and buying back
shares, the company will use its cash for bolt-on acquisitions.

For the first quarter 2013, Hanesbrands expects sales to be $945 million.
Operating profits are expected between $82 million and $85 million for the
quarter. Earnings are expected to lie within the range of $0.48 to $0.51 per
share.

For full year 2013, the company reaffirmed its sales guidance of $4.6 billion.
It expects operating profits between $500 million to $550 million for the
year. Earnings are expected to lie within the band of $3.25 to $3.40 per
share.

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