The Zacks Analyst Blog Highlights: GlaxoSmithKline, Pfizer, Johnson & Johnson, Allergan and EA Sports

Zacks

For Immediate Release
 
Chicago, IL – August 26, 2014 – 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 the GlaxoSmithKline (GSK-Free Report), Pfizer (PFE-Free Report), Johnson & Johnson (JNJ-Free Report), Allergan (AGN-Free Report) and EA Sports (EA-Free Report).
 
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Here are highlights from Monday’s Analyst Blog:

Single-Pill HIV Treatment Triumeq Cleared by FDA

GlaxoSmithKline (GSK-Free Report) announced that ViiV Healthcare’s Triumeq (a fixed-dose combination of Tivicay, abacavir and lamivudine) has been cleared by the FDA for the treatment of HIV-1 infection.

ViiV Healthcare is also looking to get the HIV drug approved in the EU and has submitted a Marketing Authorisation Application to the European Medicines Agency. The Committee for Medicinal Products for Human Use has already rendered a positive opinion on the drug. The drug will most likely gain EU approval in the third quarter of 2014.

We note that ViiV Healthcare, a company focused on the treatment of HIV, was established by Glaxo and Pfizer (PFE-Free Report) in 2009. After certain amendments in Oct 2012, Shionogi joined as a shareholder.

Our Take

We are pleased with the approval of Triumeq in the U.S. The single-pill regimen of Triumeq will reduce the pill-burden on patients and improve convenience and compliance. It is also a step forward for Tivicay, having been approved last year as an add-on therapy to other antiretroviral agents.

ViiV Healthcare has been working on developing Tivicay-based therapies. In Jun 2014, ViiV Healthcare entered into an agreement with Janssen R&D Ireland Ltd., a subsidiary of Johnson & Johnson (JNJ-Free Report), for the development and commercialization of a single tablet combination of Tivicay and Johnson & Johnson’s Edurant.

Glaxo is a Zacks Rank #5 (Strong Sell) stock. A better-ranked stock in the health care sector is Allergan (AGN-Free Report) carrying a Zacks Rank #1 (Strong Buy).

Will Strong Madden and FIFA Sales Push EA Higher?

EA Sports (EA-Free Report) has high expectations for strong sales this fall for a few reasons. Both Madden 15 and FIFA 15 are the first next gen sports games being developed for these franchises. Both games will be released for Sony Playstation 4 and Xbox One on August 26th. Considering the strong sales for next gen consoles, EA is banking on new console owners picking up a copy of these sport games. There are high expectations of new console owners will adapt these established sport franchises due to high amount of new console owners. EA is also projecting that the NFL’s growing popularity will mean stronger sales for Madden 15. In addition to the growing popularity of the NFL, EA is hoping the popularity from the FIFA World Cup will translate into more sales for FIFA 15 this fall in the US and around the world.

We currently have EA as a Zacks Rank #1 (Strong Buy) due to its strong earnings estimates revisions as of late. Since Andrew Wilson took over as CEO in 2013, EA has been regaining strength in the video game market with strong revenues and franchise successes. Despite some setbacks and criticisms, EA has been beating Wall Street's expectations under Wilson’s leadership.

Despite recent success, EA is in a tough and ever changing market. The costs of video game development is reaching an all-time high. EA has experienced the issues with high development costs with Bioware’s The Old Republic which was estimated to cost around $500 million to develop. The breakeven level is higher than ever, and established franchises, like Madden and FIFA, have high expectations to bring in solid sales to keep video game divisions afloat. These established franchises also bring in revenues for the development of new IPs which has a high risk, but a high payoff if a new hit is created. The goal for higher sales has led to increase marketing with video game ads being shown in prime time TV including sporting events, and the amount of online ads on high traffic websites like ESPN.com have increased in recent years. The question is can the first true next gen iterations of Madden and FIFA keep EA’s winning streak alive?

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