For Immediate Release
Chicago, IL – October 19, 2012 – Zacks Equity Research highlights Texas Capital Bankshares (TCBI) as the Bull of the Day and Avnet, Inc. (AVT) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Theravance Inc. (THRX), Merck (MRK) and GlaxoSmithKline (GSK).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Texas Capital Bankshares' (TCBI) second-quarter 2012 operating earnings surpassed the Zacks Consensus Estimate by $0.05 per share. Quarterly results benefited from an increase in the top line aided by an augmentation in both net interest income as well as non-interest income.
The company's business model remains a chief growth driver. In addition, the gain in market share from its competitors and organic growth is impressive. Its efforts to hire experienced bankers and expand its presence are encouraging.
We believe that with an eventual improvement in Texas' economy, the company would be poised to experience a further increase in earnings. Our six-month target price of $62.00 equates to 20.5x our earnings estimate for 2012. This price target implies an expected total return of 20.1% over that period, which is consistent with our Outperform recommendation on the shares.
We are downgrading our recommendation on Avnet, Inc. (AVT) from Neutral to Underperform. Earnings estimates for the company have declined significantly, as the weakened economy and currency fluctuation continues to hurt its businesses.
Moreover, the competitive strides in the industry may have a detrimental impact on the company. However, Avnet's diversified product ranges and notable acquisition strategy should have a positive impact on its businesses.
Mounting competition in the industry and negative foreign currency are also likely to be causes of concern moving forward. We have set a target price of $25.00 based on a P/E multiple of 8.9x to our 2013 EPS estimate.
Latest Posts on the Zacks Analyst Blog:
Theravance, Merck Ink Deal
Theravance Inc. (THRX) recently announced that it has inked a deal with Merck (MRK) for the discovery, development and commercialization of novel small molecule therapeutics for treating hypertension and heart failure.
Per the terms of the deal, Theravance will grant Merck an exclusive, global license for its candidates. The deal will see Theravance receiving an upfront payment worth $5 million apart from research related funding from Merck. Moreover, Merck will have to make milestone payments of up to $148 million for the first indication. Furthermore, Theravance will receive royalties from Merck on global net sales of any products derived from the agreement.
We note that this is the second major deal inked by Theravance over the past few weeks. Earlier in the month, Theravance announced that it has entered into an agreement with a privately held, Italy based company, Alfa Wassermann S.p.A. for the development and commercialization of the former’s velusetrag (TD-5108) in some countries. Velusetrag, an investigational 5-HT4 agonist, is being developed for treating patients suffering from gastrointestinal motility disorders.
As per the agreement, both companies will undertake the responsibility of conducting a two-part phase II program. The phase II program will evaluate the efficacy, safety and tolerability of velusetrag in patients suffering from gastroparesis. Alfa Wassermann will fund this program.
Currently, we have a Neutral stance on Theravance. The stock carries a Zacks #3 Rank (Hold rating) in the short run. Though we are concerned about the challenges currently faced by Theravance relating to Vibativ’s supply following the termination of its collaboration with Astellas, we are impressed by Theravance’s pipeline.
In particular, we are positive on Theravance’s collaborations with GlaxoSmithKline (GSK) for respiratory candidates, which include FF/VI (proposed brand names: Breo in the US and Relvar in the EU), LAMA/LABA (UMEC/VI) and MABA (GSK961081). FF/VI is currently under regulatory review and a final decision is expected by May 12, 2013. On approval, it will be positioned as a replacement for Glaxo’s Advair.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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