Analyst Actions: Merck, Covance, Intevac
BEAR STEARNS LOWERS ESTIMATES FOR MERCK
Bear Stearns analyst John Boris says the FDA's non-approvable letter for Cordaptive niacin-based cholesterol drug will make it challenging for Merck (MRK) to secure approval with additional data in the near term.
He believes Cordaptive U.S. launch will be pushed back to late 2012. Notes EU's positive opinion on MK0524A issued on Apr. 24 is counter to the FDA decision. He keeps internationall MK0524A sales estimates of $25 million, $65 million and $163 million in 2008, 2009 and 2010, respectively.
Boris maintains above-consensus 2008 EPS view of $3.38, but trims 2009 and 2010 EPS by $0.01 and $0.02 to $3.74 and $3.98. He lowers 2008, 2009 and 2010 sales by $50 million, $140 million and $329 million to $25.3 billion (+4%), $26.1 billion (+3%) and $26.7 billion (+2%) by pushing back U.S. launch of Cordaptive. He notes his adjusted sales estimates were partially offset by SG&A cost savings.
He keeps outperform on the stock, and has a 69 price target.
FRIEDMAN BILLINGS KEEPS MARKET PERFORM ON COVANCE
Friedman Billings analyst James Kumpel says Covance's (CVD) first quarter EPS is in line with his estimates and consensus. He notes first quarter is highlighted by strong late-stage performance on both top line and operating margins, however, bookings of $469 million failed to grow year-over-year or sequentially, pushing the book-to-bill ratio lower for fourth straight quarter.
Furthermore, Kumpel says CVD experienced several delays in clinical pharmacology division (Phase I). He notes, finally, $412 million service revenues were in line with his estimates, but $4 million light of Street consensus views.
He remains on the sidelines until valuation yields a more attractive entry point. He keeps $3.18 2008 and $3.82 2009 EPS estimates, as well as an 83 price target.
PIPER JAFFRAY DOWNGRADES INTEVAC TO SELL FROM NEUTRAL
Piper Jaffray analyst Jesse Pichel says Intevac's (IVAC) $0.07 first quarter EPS (including one-time items) compared favorably with previous guidance of $0.02 EPS to a $0.05 loss. He ups his $0.13 2008 EPS pro-forma EPS estimate to $0.15.
However, he notes that the stock has appreciated about 60% in the past three months and has exceeded his 11 price target. He sees few positive catalysts over the next two quarters and limited potential for order upside given capital expenditure reductions of hard drive original equipment manufacturers (IVAC customers).
Pichel notes, prior to today's opening, IVAC was trading at about 15 times his $1.08 2009 pro-forma EPS estimate. He downgrades the stock to sell, but maintains 11 price target.