Rite Aid, PHH, Novartis, Pfizer and GlaxoSmithKline highlighted as Zacks Bull and Bear of the Day

Zacks

For Immediate Release

Chicago, IL – June 05, 2014– Zacks Equity Research highlights Rite Aid Corporation (RAD-Free Report) as the Bull of the Day and PHH Corp (PHH-Free Report)  as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Novartis (NVS-Free Report), Pfizer  (PFE-Free Report) and GlaxoSmithKline (GSK-Free Report).
 
Here is a synopsis of all five stocks:

Bull of the Day:

Rite Aid Corporation (RAD-Free Report), headquartered in Camp Hill, Pennsylvania, is the third largest retail drugstore in the U.S., based on revenues. The company has about 4,600 stores and 30 walk-in clinics in 31 states across the country and in the District of Columbia.

Rite Aid recently reported that the same store sales for April increased 5.0% over the prior-year period, thanks partly due to a shift in the timing for Eater. Same store sales for the eight-week period ended April 26, 2014 (fiscal year-to-date) increased 2.9% over the prior-year period. This was better than street estimates.

Rite Aid reported its Q4 earnings on April 10, 2014. Revenues for the quarter came in at $6.6 billion; up from $6.5 billion in the same quarter of prior year, thanks mainly to a 3.5% increase in pharmacy same store sales.

Adjusted net income for the quarter was $44.1 million or $0.10 per share handily beating the Zacks Consensus Estimate of $0.04 per share.

The company recently acquired Health Dialog—a provider of in-store care coaches and RediClinic—a leading operator of retail clinics. These will further support RAD’s growth initiatives. The management however does not expect a material impact from the acquisitions on the current fiscal result. 

RAD also continues to expand its partnership with drug wholesaler MsKesson and expects a working capital benefit of $150 million as a result of the agreement, to be fully realized in the latter half of the year.

Bear of the Day:

PHH Corp (PHH-Free Report) delivers outsourcing solutions in private-label mortgage originations and fleet management through its subsidiaries, PHH Mortgage and PHH Arval.

PHH Mortgage provides outsourced solutions to financial institutions, real estate companies, credit unions, corporations and government agencies. PHH Mortgage is one of the top 10 originators of retail residential mortgages in the country. They also provide home financing directly to consumers.

PHH Arval is a fleet management services provider for corporate clients and government agencies throughout the US and Canada. They currently have over 580,000 automobiles and trucks under management in both sales and service fleets. The company has recently announced an agreement to sell this business.

On May 7, the company reported its financial results for Q1 2014. The quarter resulted in a core loss of $0.32 per share, compared to the Zacks Consensus Estimate for earnings of $0.26 per share. The company has missed estimates in three out of last four quarters, with an average negative surprise of 59%.

The Fleet business reported a profit of $21 million, which was more than offset by the $60 million loss in the Mortgage production segment and $29 million loss in the Mortgage Servicing segment.

Mortgage origination business was hurt due to plunge in refinancing volume, with the interest rate lock commitments (IRLCs) expected to be down 18% from the previous quarter and down 65% from Q1 2013. Mortgage closing volume was down 22% from the previous quarter and 45% from Q1 2013.

Additional content:

Positive ASCO Updates from Novartis
 
Pipeline updates are highly awaited events in the pharma/biotech sector as they play an important role in deciding whether or not to invest in a particular company. These updates provide information on experimental drugs and at times give an insight into the commercial potential of the candidate once it is successfully developed and commercialized.
 
Novartis (NVS-Free Report) recently presented positive results from a pivotal phase III study, PANORAMA-1, on LBH589 at the Annual Meeting of the American Society of Clinical Oncology (TATD). The results from the study showed that LBH589 in combination with Velcade and Decadron showed a 37% improvement in progression-free survival (PFS) among patients suffering from relapsed or relapsed and refractory multiple myeloma as compared to treatment with the same regimen with placebo in patients.
 
Consequently, the study met its primary endpoint. We note that the candidate was granted priority review status by the U.S. Food and Drug Administration (:FDA). 
 
The successful development and commercialization of LBH589 will bode well for Novartis as Zometa, indicated for multiple myeloma, is facing generic competition following patent expiration in 2013.
 
Novartis also announced positive data on oncology drug Zykadia from a phase I study at the ASCO. It was observed in the study that Zykadia was effective in shrinking tumors in patients suffering from anaplastic lymphoma kinase-positive (ALK+) non-small cell lung cancer (:NSCLC). The study included both treatment experienced and treatment naïve patients.
 
This study is part of the ongoing Novartis clinical trial program in this patient population. We note that Zykadia received approval from the FDA in Apr 2014 for the treatment of patients with ALK+ metastatic NSCLC who have progressed on or are intolerant to Pfizer ' s (PFE-Free Report) Xalkori (crizotinib).
 
We are encouraged by the encouraging data presented at ASCO by Novartis. We cautiously watch Novartis ' efforts to realign its portfolio in order to focus on its core business of pharmaceuticals, eye care and generics. We believe the recent acquisition of oncology products from GlaxoSmithKline (GSK-Free Report) and divestment of Vaccines business is a step in the right direction.
 
Novartis currently carries a Zacks Rank #3 (Hold).

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