The Zacks Analyst Blog Highlights: Pfizer, Zoetis, SunPower, Edison International and ReneSola

Zacks Equity Research


For Immediate Release

Chicago, IL – April 30, 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 Pfizer (PFE), Zoetis Inc. (ZTS), SunPower Corp. (SPWR), Edison International (EIX) and ReneSola Ltd. (SOL).

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Here are highlights from Monday’s Analyst Blog:

Pfizer Likely to Report In-Line Earnings

 

We expect Pfizer (PFE) to report in line first-quarter 2013 results before the opening bell on Apr 30, 2013.

Factors at Play for 1Q

We expect Pfizer to struggle to post meaningful top-line growth going forward. The company has entered a challenging operating period with the loss of patent exclusivity on Lipitor, Norvasc, Protonix, Camptosar and Zoloft. These products are all facing declining sales due to generic competition. In 2013, revenues will be hit by about $4 billion due to genericization and the expiration of a few co-promotion agreements.

While near-term earnings will be driven by cost cutting efforts and share repurchases, longer-term growth will depend on the success of drug development.

The efforts of Pfizer notwithstanding, first-quarter 2013 results will likely continue to be hurt by the genericization. Pfizer spun off its Animal Health business in Feb 2013, in order to streamline its operations. The spun off entity is currently trading on the New York Stock Exchange as Zoetis Inc. (ZTS). We note that the Animal Health business generated sales of $1.2 billion in the fourth quarter of 2012 accounting for 7.8% of total revenues.

Pfizer has delivered positive earnings surprises in the last four quarters with an average beat of 6.26%.

Earnings Whispers?

Our proven model does not conclusively show that Pfizer is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen.

Zacks ESP: The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and Zacks Consensus Estimate currently stand at 55 cents.

Zacks Rank #3 (Hold): Pfizer’s Zacks Rank #3 lowers the predictive power of ESP because the Zacks Rank #3 when combined with an ESP of 0.00% indicates the possibility of in line results.

 

SunPower Begins Solar Project Construction

 

SunPower Corp. (SPWR) in collaboration with MidAmerican Solar has begun the construction of the Antelope Valley Solar Projects (:AVSP). The 579-megawatt (“MW”) solar projects consist of two co-located projects in Kern and Los Angeles counties in Calif.

These big-scale projects are owned by MidAmerican Solar. Meanwhile, SunPower is the engineering, procurement and construction contractor. Under a multiyear services agreement, SunPower will also provide operations and maintenance services for the plants.

Together these projects form the largest solar power development that is under construction. On an average, these projects have the capacity to generate electricity that is sufficient to power approximately 400,000 homes. Per two long-term power purchase contracts, the renewable energy generated from these solar farms will be sold to Southern California Edison, a subsidiary of Edison International (EIX).

The energy generated will eradicate approximately 775,000 metric tons of carbon dioxide annually. This is almost equal to removing approximately 3 million cars from the road over the next 20 years.

SunPower is installing the SunPower Oasis Power Plant product at the sites. Oasis Power Plant product is a fully integrated, modular solar technology requiring minimal land use. The Power Plant product uses high-efficiency SunPower solar panels mounted on SunPower T0 Trackers. The T0 Trackers boost energy capture by up to 25% because of the strategic placement of solar panels.

Besides being eco-friendly, the projects will fulfill corporate social responsibility. During the three-year construction period, approximately 650 workers will be employed. Moreover, it will contribute more than $500 million to the regional economy. The construction of the projects is expected to be completed by the end of 2015.

SunPower Corporation designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.

The company is also currently working on the development of solar projects. Only a few days back SunPower commenced the construction of twin solar projects in Yolo County, Calif. The company expects the projects to produce 5.8 MW of emission-free solar power for county facilities.

Going forward, we like the company’s diversified channel strategy with a strong presence in the residential and commercial market, along with its status as a conversion efficiency leader. Over the near term, however, we are apprehensive about the higher cost structure of the company compared to its peers, the glut of solar panels in the market, lower average selling prices, subsidy roll-back risk in Europe, rising competition, financial stability of its customers and foreign exchange risk.

SunPower carries a Zacks Rank #3 (Hold). One stock worth considering is ReneSola Ltd. (SOL) with a Zacks Rank #2 (Buy).

 

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Read the analyst report on PFE

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Read the analyst report on SPWR

Read the analyst report on EIX

Read the analyst report on SOL

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