For Immediate Release
Chicago, IL – July 29, 2014– Zacks Equity Research highlights Fairchild Semiconductor (FCS-Free Report) as the Bull of the Day and E*Trade Financial (ETFC-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Gilead Sciences (GILD-Free Report), Roche (RHHBY-Free Report) and Biogen Idec (BIIB-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Fairchild Semiconductor (FCS-Free Report) is a global company focused solely on designing, manufacturing and marketing high performance semiconductors for multiple end users. Their components are used in computer, telecommunications, automotive, consumer and industrial applications. Fairchild supplies logic, analog, mixed signal, non-volatile memory as well as discrete power and signal technologies solutions. That’s a fancy way of saying they make microchips for all types of things.
Fairchild is a Zacks Rank #1 (Strong Buy). Analysts have been very bullish on Fairchild as of late. Seven analysts have raised their estimates for the current year and six for next year within the last 30 days. This bullish attitude pushed consensus up from 50 cents to 64 cents for the current year and up from 84 cents to 96 cents for next year.
FCS has a great track record of beating earnings recently. Over the last four quarters FCS has beat every quarter by an average of 4 cents. Last quarter’s beat came in at 20 cents, 9 cents better than analyst consensus of 11 cents per share.
Industrial and appliance demand were seasonally strong in Q2 2014, part of the reason for the big beat. The other was automotive sector demand was up 9% quarter-over-quarter and 14% year-over-year. This helped push gross margin up 3 points to 33.4%.
Bear of the Day:
The gravy train is going to stop eventually. It’s been one heck of a ride so far. I’m not saying it ends today, but it’s going to end one day. This market has nearly tripled off the bottom in March 2009, screaming higher every day. It seems like the term “All-time high” gets said every single day.
Many companies have been able to cash in on the success of the stock market. Some have done so more than others. In a great trading environment like this you’d think that the online brokerage business is the place to be. So when I see a company not flourishing in what is a great environment, it makes me a bit nervous. That’s the current situation we have with our Bear of the Day, E*Trade Financial (ETFC-Free Report).
We’ve all seen the commercials with the hilarious talking baby. This cute little guy amuses us with his mix of investing knowhow and infant problems. Getting a baby’s perspective on his crib is one of the funnier commercials in the series.
What’s not so funny is E*Trade’s Zacks Rank #5 (Strong Sell) rating. Two analysts have revised their current year earnings targets to the downside over the last month. This pessimism has brought consensus down from $1.06 to $1.02 per share for the current year and down from $1.24 to $1.16 for next year.
Gilead’s Oncology Drug Recommended for Approval in EU
Close on the heels of the oncology drug Zydelig (idelalisib 150 mg) gaining approval in the U.S., Gilead Sciences (GILD-Free Report) announced that the drug has been recommended for approval in the EU by the European Medicines Agency's (EMA.TO) Committee for Medicinal Products for Human Use (CHMP).
The CHMP has recommended the approval of the drug for treating adults suffering from chronic lymphocytic leukemia (CLL.TO) and follicular lymphoma (FL). The favorable opinion from the CHMP will now be reviewed by the European Commission with a final decision expected in the next couple of months.
In particular, the CHMP is in favor of the EU approval of Zydelig in combination with Roche/ Biogen Idec’s (RHHBY-Free Report/BIIB-Free Report) Rituxan for treating CLL patients who have received at least one prior therapy or as a first-line treatment in CLL patients unsuitable for chemotherapy due to a genetic mutation. The CHMP has also recommended approving the drug as a monotherapy for treating FL patients who have not responded to two prior therapies.
The CHMP’s favorable opinion is based on encouraging results on Zydelig from two studies —116 (phase III) and 101-09 (phase II). We note that Zydelig was approved in the U.S. last week for treating three forms of blood cancer — CLL (in combination with Rituxan), FL and small lymphocytic lymphoma.
However, the approval came with a black box warning about the risk of severe toxicities. The drug was approved with a Risk Evaluation and Mitigation Strategy to make the doctors and patients aware of the risks associated with the drug’s usage.
We believe that investor focus will remain primarily on Gilead’s hepatitis C virus drug Sovaldi. The drug has recorded sales of approximately $5.8 billion in the first six months of 2014. The treatment is expected to continue its strong performance through 2014.
Gilead currently carries a Zacks Rank #3 (Hold).
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About the Bull and Bear of the Day
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