Valeant Pharmaceuticals, Yamana Gold, Helen of Troy, Inter Parfums and
Elizabeth Ardenhighlighted as Zacks Bull and Bear of the Day
CHICAGO, July 9, 2013
CHICAGO, July 9, 2013 /PRNewswire/ --Zacks Equity Research highlights Valeant
Pharmaceuticals (NYSE:VRX-Free Report) as the Bull of the Day and Yamana Gold
(NYSE:AUY-Free Report) as the Bear of the Day. In addition, Zacks Equity
Research provides analysis onthe Helen of Troy Limited (Nasdaq:HELE-Free
Report), Inter Parfums Inc. (Nasdaq:IPAR-Free Report) and Elizabeth Arden Inc.
Here is a synopsis of all five stocks:
Bull of the Day:
Valeant Pharmaceuticals (NYSE:VRX-Free Report), Zacks Rank #1, is a healthcare
provider with a focus on dermatology and eye care products. Valeant may
provide a remedy for investors looking for growth in a macro environment
filled with unease over higher interest rates, slow economic growth, and
geopolitical strain. Interest rates have shot higher in recent weeks on firm
U.S. labor market conditions and ideas the Federal Reserve could taper its
asset purchase program in September, while the IMF recently hinted it could
cut its global growth forecast due to the weak performance in emerging market
economies. These dynamics are mixed social unrest in Egypt. Demand for
healthcare products should be insulated from these macro dynamics, and growth
shares in the healthcare sector may provide refuge for investors trying to
avoid the pot holes of higher rates and slow global growth.
Valeant has produced vibrant revenue growth in recent years helped by an
aggressive acquisition strategy. Valeant made 11 acquisitions in 2011 and
another 12 in 2012. These actions helped to propel 108% revenue growth in
2011 and another 44% in 2012. In Late May, Valeant announced the purchase of
Bausch and Lomb. The deal is expected to generate $800 mln in cost savings,
an internal rate of return in excess of 20%, and be accretive to earnings. In
a recent company presentation, Valeant highlighted an aging population,
increased incidence of diabetes, and rising wealth in emerging nations as
factors which will support growth in ophthalmology.
Of the nine analysts covering Valeant, five have moved their 2013 and 2014
earnings per share estimates higher in the past quarter. At the same time, the
consensus earnings per share estimates for 2013 and 2014 have increased $0.29
and $1.39 to $5.93 and $7.92 respectively over the past quarter.
Bear of the Day:
Investors have been fleeing gold investments this year, and the tarnish on the
yellow metal has spilled into gold stocks. Yamana Gold (NYSE:AUY-Free
Report), Zacks Rank #5, is a Canadian gold producer with operations in the
Americas and has been a causality of the bear market in gold.Investors
should look to mine for profits elsewhere.
Of the ten analysts covering Yamana, six have cut their profit estimate over
the past 60 days. The consensus outlook for 2013 earnings per share has
declined from $0.85 to $0.68 or 20% over the same period. Furthermore, the
most accurate forecaster of earnings for Yamana is more pessimistic than the
consensus looking for 2013 earnings per share at $0.49, which is about 28%
below the consensus view of $0.68.
This raises the prospect for a downside earnings surprise.The weak trend in
earnings estimates bodes poorly for Yamana which has already missed profit
estimate four of the past five quarters. A firm dollar, higher treasury
yields, strong equity returns, and talk of the Federal Reserve tapering its
asset purchase program have created a bearish cocktail for the gold market and
a headwind to the outlook for Yamana's profits.
Furthermore, India has historically been a large buyer of gold, but the
weakness in the Indian rupee has hurt the purchasing power of the Indian
consumer. The Indian government has implemented measures to restrict gold
imports in order to reduce India's current account deficit and the Central
Bank of India has curbed the use of credit cards for the purchase of gold
items, including jewelry.Investor distaste for gold may be seen in the
liquidation of gold held by the SPDR Gold ETF. Gold holdings have declined by
almost 389 tons or 28.7% since the end of 2012. At 962 tons, holdings are at
their lowest level since February 2009.
Helen of Troy Downgraded to Strong Sell
On Jul 6, 2013, Zacks Investment Research downgraded the global consumer
products company, Helen of Troy Limited (Nasdaq:HELE-Free Report), to a Zacks
Rank #5 (Strong Sell). The downgrade was based on the company's disappointing
outlook for fiscal 2014 and tough macroeconomic conditions and higher costs
lying ahead for the company.
Why the Downgrade?
On Apr 29, 2013, at its fourth-quarter fiscal 2013 conference call Helen of
Troy provided a conservative fiscal 2014 guidance due to a tough retail
environment and a conservative approach to the cold/cough/flu season. Further,
management expects that the product costs will increase across all segments
during fiscal 2014.
We expect that the company will incur high costs as it transitions to the new
1.3 million square foot distribution facility in Olive Branch, MS, to
accommodate anticipated future growth.
Further, in the Personal Care segment Helen of Troy expects sales to decrease
in fiscal 2014 due to the stiff competition in the liquids area. Some of its
major competitors have launched shampoo lines that are competing directly with
those of Helen of Troy. In fact, the Personal Care segment has been
consistently reporting sluggish growth for several quarters mainly due to
difficult U.S. retail sales environment in the grooming, skin care and hair
Estimates mostly moved downwards following the discouraging guidance provided
by the company for the fiscal 2014. The Zacks Consensus Estimate for fiscal
2014 fell 7.9% to $3.55 over the last 90 days. Similarly, the Zacks Consensus
Estimate for fiscal 2015 fell 18.0% to $3.27 over the same period.
The company has missed estimates in two of the past four quarters. Moreover,
though it beat the Zacks Consensus Estimate in the fourth quarter it was only
because of tight cost control. The top line results were not strong enough –
thus signaling lack of growth.
Other Stocks to Consider:
Others players in the same industry which look attractive at the current
Inter Parfums Inc.
Elizabeth Arden Inc.
). While Inter Parfums carries a Zacks Rank #1 (Strong Buy), Elizabeth Arden
holds a Zacks Rank #2 (Buy).
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