The Zacks Analyst Blog Highlights: Elan, Biogen Idec, WuXi PharmaTech, QLT and
CHICAGO, April 23, 2013
CHICAGO, April 23, 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 Elan Corporation (NYSE:ELN),
Biogen Idec (Nasdaq:BIIB), WuXi PharmaTech (NYSE:WX), QLT Inc. (Nasdaq:QLTI)
and Reynolds American Inc. (NYSE:RAI).
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Here are highlights from Monday's Analyst Blog:
Elan Turns Down Royalty's Offer
Elan Corporation's (NYSE:ELN) Board of Directors recently rejected Royalty
Pharma's offer to acquire all the shares of Elan for $11.25 or less per share.
Elan' Board of Directors believed that Royalty Pharma's offer significantly
undervalued the company's current business platform and its future prospects.
The Board was unanimous in rejecting the offer. Meanwhile, the company advised
its shareholders not to take any action in relation to the Royalty Pharma
Last week, Elan announced the final results of its modified Dutch auction
tender offer, of a maximum aggregate value of $1 billion, to repurchase its
ordinary shares, including ordinary shares represented by American Depositary
Shares. As a result of the tender offer, the Dutch auction strike price stands
We note that 1 ADS is equal to 1 share of Elan.
Following the determination of the Dutch auction strike price at $11.25,
Royalty Pharma confirmed that its offer for each outstanding share and ADS of
Elan is also the same. Earlier Royalty Pharma announced its offer at different
prices for different Dutch auction strike prices, where it mentioned that if
the strike price is $11.25, it will offer the same for each outstanding share
and ADS of Elan.
Royalty Pharma had also stated that it was not aware of Elan's current cash
position. If the latter does not disclose its cash position, Royalty Pharma
would have to reduce its offer by $1.00 and Elan's shareholders would have an
option to receive up to $1.00 in cash depending on its cash position.
Meanwhile, Elan closed its Tysabri (natalizumab) collaboration transaction
with Biogen Idec (Nasdaq:BIIB) earlier this month. As a result, Biogen gained
full strategic, commercial and operational control over the drug.
Elan, a biotechnology company, currently carries a Zacks Rank #3 (Hold).
Currently, well-placed biotech stocks include WuXi PharmaTech (NYSE:WX) and
QLT Inc. (Nasdaq:QLTI). Both stocks carry a Zacks Rank #1 (Strong Buy).
Will Reynolds Beat Estimates?
Reynolds American Inc. (NYSE:RAI) is set to report its 2013-first quarter
results on April 23. In the last reported quarter, the company posted a 2.6%
positive surprise. Let's see how things are shaping up for this announcement.
Growth Factors This Past Quarter
Reynolds benefited from improved pricing and volume gains for moist snuff
products that offset declines in cigarette volumes and marketing expenses.
Revenues slipped marginally from the year-ago quarter mainly due to declining
cigarette shipment volumes. Governmental actions and anti smoking campaigns
have led to the decline in shipment volumes. Moreover, higher excise taxes and
increasing popularity of other tobacco products led to the decline. However,
the American Snuff and Santa Fe segment reported positive results on the back
of innovations and positive pricing during the quarter.
Our proven model does not conclusively show that Reynolds American is likely
to beat earnings this quarter. That is because a stock needs to have both a
positive Zacks Earnings Expected Surprise Prediction (ESP) and a Zacks Rank of
#1, 2 or 3 for this to happen (Read: Zacks Earnings ESP: A Better Method).
That is not the case here as you will see below.
Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate stands
at 69 cents. That is a difference of 0.00%.
Zacks Rank #3 (Hold): Reynolds'Zacks Rank #3 (Hold) lowers the predictive
power of ESP because the Zacks Rank #3 when combined with a non positive ESP
makes surprise prediction difficult. We caution against stocks with Zacks Rank
#4 and #5 (Sell rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions momentum.
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