For Immediate Release
Chicago, IL – August 7, 2012 – Zacks Equity Research highlights Alkermes Plc (ALKS) as the Bull of the Day and GlaxoSmithKline, plc (GSK) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Limited Brands Inc. (LTD), Hanesbrands Inc. (HBI) and Gap Inc. (GPS).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Alkermes Plc (ALKS) reported earnings of $0.28 per share (including depreciation and stock-based compensation expenses) in the first-quarter of fiscal 2013. The Zacks Consensus Estimate was $0.10 per share. Alkermes also beat the Zacks Consensus Estimate in terms of revenues.
Results were boosted by the inclusion of drugs belonging to the EDT unit of Elan. This was the third full quarter following the merger with EDT. Alkermes reiterated its guidance for fiscal 2013. We are also impressed by the FDA approval and launch of diabetes drug Bydureon, which offers significant commercial potential.
Overall, we are pleased by the pipeline progress at Alkermes. We retain our Outperform recommendation on the stock. Our price target of $22.00 is based on 5.6x our fiscal 2013 revenue estimate.
GlaxoSmithKline, plc's (GSK) second quarter earnings of $0.79 per ADS were below the Zacks Consensus Estimate of $0.84. Earnings fell 2.5% year over year. Revenues fell 7.3% y/y to $10.2 billion, missing the Zacks Consensus Estimate of $10.4 billion.
Glaxo expects 2012 revenues to remain flat y/y (at CER). Earlier, Glaxo was expecting revenues to grow from 2011 levels. Guidance was lowered due to EU pricing pressure. A major part of Glaxo's revenues will be exposed to generic competition as multiple drugs are scheduled to lose exclusivity in the next few years. We expect the company's top line as well as gross margins to remain under pressure in the coming quarters.
In addition to generic competition, US health care reform and EU pricing pressure will continue to affect sales. Thus, we maintain our Underperform recommendation on Glaxo, which carries a Zacks #4 Rank (short-term Sell rating).
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Limited Brands’ Robust July Sales
Limited Brands Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products, posted strong comparable-store sales results for the four-week period ended July 28, 2012. The increase resulted from strong sales at its Victoria's Secret Stores and Bath & Body Works.
Limited Brands, owner of Victoria's Secret Direct and La Senza chains, has sustained its growth momentum. The company’s comparable-store sales for July 2012 rose 12% following an increase of 7% in June and compared with a 6% growth in July 2011. Management now expects comps to rise in the low single digits for the month of August.
Comparable-store sales for July increased 12% at Victoria’s Secret Stores & Victoria’s Secret Beauty and 17% at Bath & Body Works & The White Barn Candle Co. but declined 5% at La Senza. Sales at Victoria’s Secret Direct inched up 1%.
Limited Brands, which competes with Hanesbrands Inc. (HBI), announced that net sales for July fell marginally by 1.6% to $649.8 million from $660.4 million posted in the comparable prior-year month. The prior-year period sales included $67.7 million from a third-party apparel sourcing business that was sold in November 2011.
In terms of performance, Limited Brands fared better than its competitor Gap Inc. (GPS), which also posted a solid comparable-store sales increase of 10%.
For the 26-week period ended July 28, 2012, Limited Brands registered comparable-store sales growth of 8%. However, net sales for the period fell 2.6% to $4,553 million from $4,675 million in the prior-year period. The prior-year sales included $430.6 million from a third-party apparel sourcing business that was sold in November 2011.
Comparable-store sales for the second quarter of 2012 rose 8%. Sales for the quarter dropped 2.4% to $2,399 million from $2,458 million in the year-ago quarter. Prior- year quarter sales consist of $216.6 million from a third-party apparel sourcing business that was sold in November 2011.
The better-than-expected July comparable-store sales performance prompted management to raise second-quarter 2012 earnings guidance to a range of 46 cents to 48 cents, from 40 cents to 45 cents forecasted earlier.
Limited Brands also announced the payment of a special dividend of $1 per share, apart from regular quarterly dividend of 25 cents a share. Both the dividends are scheduled to be paid on September 7 to stockholders of record as on August 23.
The company’s Bath & Body Works segment is gaining traction, driven by a rise in store transactions, enhancement in the direct channel business and new stores. Victoria’s Secret Stores have been performing well, and the company is also revamping its La Senza brand.
Limited Brands intends to augment its retail footprint across the globe by expanding aggressively in Canada and other international markets. Moreover, the company’s strong liquidity positions it for growth as well as higher returns. However, stiff competition and erratic consumer behavior still remain matters of concern.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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