The Zacks Analyst Blog Highlights: Amgen, Freeport-McMoRan Copper & Gold, Plains Exploration & Production, McMoRan Exploration and Atlatsa Resources

Zacks


For Immediate Release

Chicago, IL April 23, 2013 – 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 Amgen Inc. (AMGN), Freeport-McMoRan Copper & Gold Inc. (FCX), Plains Exploration & Production Company (PXP), McMoRan Exploration Co. (MMR) and Atlatsa Resources Corporation (ATL).

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Here are highlights from Monday’s Analyst Blog:

Will Amgen Beat Earnings?

We expect Amgen Inc. (AMGN) to beat earnings expectations when it reports first-quarter 2013 results after the closing bell on Apr 23, 2013.

Why a Likely Positive Surprise?

Our proven model shows that Amgen has the right combination of two key ingredients to beat earnings.

Positive Zacks ESP: The earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) for Amgen is +1.14% – the difference between the Most Accurate earnings estimate of $1.77 per share and the Zacks Consensus Estimate of $1.75 per share. This indicates a likely positive earnings surprise.

Zacks Rank #3 (Hold): Note that stocks with Zacks Rank of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should never be considered while going into an earnings announcement.

The combination of its Zacks Rank and Earnings ESP for Amgen makes us confident of a positive earnings surprise in the to-be-reported quarter.

Drivers of Better-than-Expected Earnings

This biotech company has delivered positive earnings surprises in three of the last four quarters with an average beat of 11.43%. Key growth drivers at Amgen include Enbrel, Xgeva and Prolia.

We are also impressed by Amgen’s efforts to expand in key markets. Moreover, the company’s moves to launch new manufacturing technologies coupled with the efforts to develop its pipeline are encouraging.

Freeport, Plains Set Date for Merger Vote

Mining giant Freeport-McMoRan Copper & Gold Inc. (FCX) said that Plains Exploration & Production Company (PXP) will hold a special shareholders’ meeting on May 20 to vote on the proposed buyout of Plains by Freeport. Shareholders who held Plains shares at the close of business on Mar 21, 2013, are entitled to vote on the merger.

Freeport, in Dec 2012, forged definitive merger pacts to buy Plains and McMoRan Exploration Co. (MMR) for roughly $9 billion. The move represents a part of the company’s strategy to diversify away from its bread-and-butter copper mining business. 

 

Per the agreement, Freeport is buying Tex.-based independent oil and gas company Plains for $50 per share in cash and stock. Plains shareholders have been given an option to receive cash or stock. Freeport is expected to pay $6.9 billion in cash to buy Plains.

Moreover, Freeport is paying $14.75 per share in cash to buy La.-based exploration and production company McMoRan. McMoRan shareholders will also get 1.15 units of a royalty trust for each share they hold. While the total deal value is $3.4 billion, the actual cash portion of the transaction is $2.1 billion (excluding 36% interest currently owned by Freeport and Plains). 

The total transaction value for the twin deals is roughly $20 billion taking into account the debt to be assumed by Freeport as part of the deal. The transactions are subject to regulatory clearances and approval of the shareholders of the respective companies and are expected to consummate in second-quarter 2013. 

The merger is expected to make the combined entity a leading natural resource conglomerate in the U.S., leveraging Freeport’s industry-leading mineral assets and the oil and gas resources of Plains and McMoRan. The addition of Plains’ established oil production assets and McMoRan natural gas drilling capabilities and shallow water ultra-deep properties will provide Freeport a significant exposure to energy markets.

Freeport expects the combined entity to generate operating cash flows of roughly $9 billion and earnings before interest, taxes, depreciation, and amortization (:EBITDA) of around $12 billion in 2013. Roughly 74% of the combined company’s projected EBITDA is expected to derive from mining with the balance coming from oil and gas. The company sees significant synergies from the acquisitions.

Freeport currently holds a short-term Zacks Rank #3 (Hold).

Atlatsa Resources Corporation (ATL), which also belongs to the mining industry, retains a Zacks Rank #2 (Buy).

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Read the analyst report on AMGN

Read the analyst report on FCX

Read the analyst report on PXP

Read the analyst report on MMR

Read the analyst report on ATL

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