For Immediate Release
Chicago, IL – August 6, 2012 – Zacks Equity Research highlights Loews Corporation (L) as the Bull of the Day and Ford Motor Company (F) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bristol-Myers Squibb Company (BMY), Pfizer (PFE) and Sanofi (SNY).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Loews Corporation (L) second quarter earnings substantially missed the Zacks Consensus Estimate and year-ago results. Lower earnings at Diamond Offshore and soft results from equity and limited partnership investments at the parent company weighed on the results, but higher earnings at CNA Financial Corporation and Boardwalk Pipeline Partners, LP were the positives.
Loews aims to strengthen its hotel business by doubling its hotel count within the next three to five years, and expects to triple the net income within the next three years. Elsewhere, Diamond Offshore continues to work on improving its fleet. Boardwalk's increased capacity and expansion projects, strong balance sheet with low leverage and adequate cash also bodes well.
The company also remains focused on enhancing its shareholders value through share buybacks. We retain our Outperform recommendation on Loews. Our six-month target price of $47.00 per share equates to about 15.2x our 2012 earnings estimate. This price target, along with the annual dividend of $0.25 per share, implies an expected total return of 19.2%.
Ford Motor Company (F) saw a depressing 2012 second quarter, with a sharp 39% fall in profits to $0.30 per share and 6% drop in revenues to $33.3 billion due to lower operating results in all regions except North America. Further, it expects market share in the U.S. and Europe to be lower than 16.5% and 8.3%, respectively, in 2011 and overall pre-tax operating profit to be lower than 2011 compared with the prior guidance of tallying.
We are also concerned about the company's higher structural costs and economic weakness around the world. Therefore, we continue with our Underperform recommendation on the stock and set a target price of $8.25.
The current P/E, which is close to the lower end of the historical range, is at a 31% discount to the peer group for 2012. Our $8.25 target price, 6.2x 2012 EPS, reflects our Underperform recommendation.
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Pipeline Setback at Bristol-Myers
Bristol-Myers Squibb Company (BMY) recently suffered a pipeline setback when it voluntarily decided to halt a phase II study of its hepatitis C candidate, BMS-986094 (formerly known as INX-189) due to a safety issue.
Even though it has not yet been determined whether Bristol-Myers’ hepatitis C candidate was responsible for the safety issue, the company is assessing the safety of all the patients in the trial. Following the completion of the safety assessment, Bristol-Myers intends to take appropriate action.
We remind investors that BMS-986094 was added to Bristol-Myers’ pipeline following its acquisition of Inhibitex Inc. earlier this year.
We note that the setback concerning BMS-986094 is the second pipeline-related disappointment at Bristol-Myers over the last month. In July 2012, Bristol-Myers’ brivanib performed disappointingly in a phase III study (BRISK-FL) in the hepatocellular carcinoma indication.
Moreover, in June 2012, the company suffered a regulatory setback when the US Food and Drug Administration (:FDA) declined to approve Bristol-Myers/Pfizer’s (PFE) anti-clotting drug Eliquis (apixaban) on the basis of the submitted data and issued a complete response letter. Bristol-Myers and Pfizer are looking to get the blood thinner approved in the US for preventing strokes and systemic embolism in patients suffering from nonvalvular atrial fibrillation (AF). AF refers to a cardiac rhythm disorder characterized by an erratic heartbeat.
Such pipeline/regulatory setbacks have the potential to be major hindrances as Bristol-Myers aims to regroup following the loss of exclusivity of blockbuster blood-thinner Plavix in the US on May 17, 2012. The genericization of Plavix, co-developed with Sanofi (SNY), has caused significant revenue losses for Bristol-Myers.
Bristol-Myers is looking to combat the generic threat through partnering deals and acquisitions. Apart from acquisitions and partnership deals, Bristol-Myers is looking to introduce new products to augment its product portfolio to combat the generic threat.
We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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