The Zacks Analyst Blog Highlights: RadioShack, Amicus Therapeutics, Sanofi, Shire and Gilead Sciences

Zacks

For Immediate Release
 
Chicago, IL – August 28, 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 RadioShack Corp. (RSH-Free Report), Amicus Therapeutics (FOLD-Free Report), Sanofi (SNY-Free Report), Shire (SHPG-Free Report) and Gilead Sciences Inc. (GILD-Free Report).
 
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Here are highlights from Wednesday’s Analyst Blog:

RadioShack Up Big on Possible Bankruptcy Rescue Plan
 
Shares of the beleaguered electronic and mobile products retailer, RadioShack Corp. (RSH-Free Report), shot up more than 19% yesterday after Bloomberg reported that the company is in talks with its shareholder Standard General LP regarding rescue financing.
 
In order to avoid Chapter 11 of bankruptcy proceedings, the company is trying to formulate a plan in association with Standard General. The latter is trying to boost RadioShack’s cash position by issuing equity or debt.
 
Of late, RadioShack has undertaken several strategic moves to make a turnaround. Management is focusing on reducing costs, which includes closing up to 200 stores every year over the next three years; lowering rent expense through negotiations with landlords; reducing compensation expense by optimizing labor hours and store operating hours; and reviewing other expenses to identify cost-reduction opportunities.
 
Unfortunately, none of these methods has produced any effective results. At present, major concerns for the company are its decreasing liquidity, widening losses and disagreements with its lenders over the store closure plan.
 
In the last reported first quarter of fiscal 2015 RadioShack’s revenues declined 13%, gross profit dropped 21% and adjusted operating loss soared by a whopping 700% from the comparable prior-year period. At the end of the quarter, the company had just $62 million in cash and $1.2 billion in debt and short-term liabilities.  
 
Moreover, comparable store sales for company-operated stores and kiosks (stores and kiosks that have been operational for at least a year) were down 14% in the last reported quarter. This is a key retail performance indicator measuring growth from the existing sales locations. Weaker-than-expected performance by the company has resulted in the steep fall of the company’s shares, which have plummeted more than 70% in the past one year.
 
RadioShack’s core consumer electronics (including digital TVs, digital music players, and digital cameras) retail business is on a secular downtrend and is unlikely to recover in the near future. Loss of foot traffic is taking a toll on RadioShack’s mobility business – a parameter on which the company had been banking for its future growth.
 
Amicus (FOLD) Soars on Fabry Drug Trial Results
 
Shares of Amicus Therapeutics (FOLD-Free Report) soared 20.4% after the company announced positive data from its second phase III study (Study 012) on the oral small molecule chaperone migalastat HCl in Fabry patients with amenable mutations.
 
The phase III study is evaluating the use of oral migalastat to standard-of-care enzyme replacement therapies (ERTs) − Sanofi’s (SNY-Free Report) Fabrazyme and Shire’s (SHPG-Free Report) Replagal − for Fabry disease. Eighteen-month data from the phase III study revealed that migalastat successfully met both the primary endpoints of comparability to ERT on key measures of kidney function. Additionally, the candidate demonstrated low and stable plasma lyso-Gb3 levels in patients who switched from ERT to migalastat.
 
In April this year, Amicus had announced positive results from its first phase III study (Study 011) on migalastat. Shares at that time had gained over 20% on the news. Migalastat had shown a statistically significant reduction in kidney interstitial capillary GL-3 at month 12 as compared to placebo.
 
Amicus plans to submit the marketing application for migalastat next year. We are encouraged by the positive data on migalastat considering that it is one of the key candidates at Amicus. We believe that post approval the drug could capture ERT’s market share which is valued at over $1 billion. Investor focus is expected to remain on migalastat going forward. 
  
Amicus, a biopharmaceutical company, currently carries a Zacks Rank #2 (Buy). A better-ranked stock in the biopharma sector is Gilead Sciences Inc. (GILD-Free Report). The stock carries a Zacks Rank #1 (Strong Buy).

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