Cree, Intuitive Surgical, Alexion Pharmaceuticals, Roche and Onyx
Pharmaceuticals highlighted as Zacks Bull and Bear of the Day
CHICAGO, July 16, 2013
CHICAGO, July 16, 2013 /PRNewswire/ --Zacks Equity Research highlights Cree
(Nasdaq:CREE-Free Report) as the Bull of the Day and Intuitive Surgical
(Nasdaq:ISRG-Free Report) as the Bear of the Day. In addition, Zacks Equity
Research provides analysis on the Alexion Pharmaceuticals, Inc.
(Nasdaq:ALXN-Free Report), Roche (OTC:RHHBY-Free Report) and Onyx
Pharmaceuticals, Inc. (Nasdaq:ONXX-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Now that we are in the heart of earnings season, many investors are zeroing in
on company reports to drive the market. While investors seem to be pretty
bullish on financials for this quarter, one segment that may also provide some
earnings growth is technology.
However, not just any tech company will do, as you will need to drill down
into a few key segments for strong earnings growth. In particular, the
semiconductor segment could be an interesting choice, thanks to the high Zacks
Industry Ranks for this space, and the surging stock prices of many companies
in this corner of the tech world. A number of semiconductor firms fit this
bill as solid investments during this time frame, but one stands out for its
promise this earnings season; Cree (Nasdaq:CREE-Free Report).
Cree is a North Carolina-based company that focuses on LED products that are
used in a number of applications including game displays, automobiles,
signage, among others. Beyond their LED division, the company also makes power
conversion products, Radio Frequency-based items, and semiconductor materials
The firm is becoming increasingly well-known as demand increases for energy
efficient applications across the board. Plus, it doesn't hurt that the firm's
stock has risen by almost 200% in the past 52 weeks alone. While this is
obviously an already amazing level of stock price growth, there is plenty of
reason to believe that this trend can continue, especially if you look to
earnings estimates for the company.
Bear of the Day:
Despite concerns over sweeping healthcare law changes, the medical sector has
actually been a solid performer so far this year. In fact, the main ETF for
the space, the Health Care Select Sector SPDR has easily outperformed the S&P
500 in the first half of 2013, trouncing the broad market by over 700 basis
However, some corners of the market could be facing troubles—especially in the
medical device and equipment space—as concerns over healthcare spending are
starting to take their toll on a number of companies in the space, as many are
forgoing new purchases of equipment, or are buying less. One such company that
has been the poster child of this trend and has seen its stock price suffer as
a result is certainly Intuitive Surgical (Nasdaq:ISRG-Free Report).
ISRG is probably best known for its da Vinci Surgical System which helps
surgeons to perform operations with increased precision and control. The basis
of the system uses robotics, while there are also HD 3D vision systems, and
proprietary instrument technologies as well.
Sales of this innovative device rose pretty much across the globe, though they
struggled in the American market, according the preliminary Q2 earnings. Their
key product saw only 90 sales in the U.S. market, compared to 124 a year ago,
highlighting a very sluggish sales market (also read Medical Device ETFs Slump
on Intuitive Surgical Crash).
This was especially troubling because the company pinned the lower sales on
the difficult environment in the U.S., and the lack of hospital dollars for
new technologies. This bearish outlook is driving the stock sharply lower,
with prices for ISRG collapsing by about 14% in the past month alone.
And with the poor outlook from company management, many analysts seemed to
have no choice but to slash their expectations for the company in the near
term. In the past week, eight estimates have been cut for the current and next
quarters, as well as the current and next year periods as well.
Alexion on Roche's Radar?
According to Bloomberg News, Alexion Pharmaceuticals, Inc. (Nasdaq:ALXN-Free
Report) is being eyed by Roche (OTC:RHHBY-Free Report). People familiar with
the situation, who declined to be identified, commented that Roche is seeking
funds to finance the deal. Alexion Pharma, with a market cap of around $20
billion, surged more than 12% in Friday trading on the Nasdaq following rumors
of the potential sale.
However, according to Reuters, Alexion Pharma's expensive valuation could
prevent the transaction from materializing. Based on 2013 earnings estimates,
Alexion is trading at 42.9x compared to the S&P average of 15.6x.
Roche is aiming to diversify its product portfolio through this potential
takeover. The Swiss drugmaker boasts a strong oncology portfolio. The
acquisition of Alexion Pharma, if it materializes, would give Roche access to
Alexion Pharma's sole marketed drug Soliris.
Soliris is available for the treatment of paroxysmal nocturnal hemoglobinuria
(PNH), a rare genetic disorder. In Sep 2011, the US Food and Drug
Administration (FDA) cleared Soliris for treating children and adults
suffering from atypical hemolytic uremic syndrome, an ultra-rare genetic
In Nov 2011, a similar approval for the drug was granted in the EU. Soliris is
being studied for additional indications. The drug recorded sales of $1.13
billion in 2012, up 45%.
Strong Soliris sales for the PNH indication have helped the company achieve
profitability since the second quarter of 2008. Sales of the drug have been
boosted further by its label expansion into the aHUS indication.
Apart from rumors regarding Alexion Pharma's potential takeover, Onyx
Pharmaceuticals, Inc. (Nasdaq:ONXX-Free Report) is another stock in the
biopharma space which is in the news as an acquisition target.
Alexion Pharma currently carries a Zacks Rank #3 (Hold).
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