For Immediate Release
Chicago, IL – August 1, 2013 – Zacks Equity Research highlights Gap, Inc. (GPS-Free Report) as the Bull of the Day and Amazon.com (AMZN-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Cubist Pharmaceuticals, Inc. (CBST-Free Report), Optimer Pharmaceuticals, Inc. (OPTR-Free Report) and Gilead Sciences Inc. (GILD-Free Report).
Here is a synopsis of all five stocks:
Everything appears to be going right for Gap, Inc. (GPS-Free Report) as it has become the darling retailer of Wall Street. Left for dead during the Great Recession, shares of this Zacks Rank #1 (Strong Buy) are at 10-year highs as monthly comps continue to come in stronger than expected.
Gap is a famous American retailer with three main brands: Gap, Old Navy and Banana Republic. It also operates Athleta, the women's athletic and yoga retailer which is a big part of its strategy to expand into the lucrative athletic wear market.
It has over 3100 company operated stores and 300 franchise stores. Each brand also has its own web site.
Gap is one of the few retailers which still reports monthly sales results. On July 11, it reported June results which were better than the analysts had expected, with same store sales jumping 7% compared to flat sales the year before.
Other retailers' results weren't as strong as many blamed the cooler than expected weather.
Old Navy, its largest segment, led the quarter as sales rose 13% due to summer promotions and strength in flip flops and dresses. Gap also showed strength as its sales rose 5% due to strong sales in denim and shorts.
Only Banana Republic struggled, as global sales fell 1% due to softness in the women's side of the business. Athleta is not yet big enough to be broken out separately.
Investors love Amazon.com (AMZN-Free Report) but analysts sent it into time out after it recently missed on second quarter earnings. This Zacks Rank #5 (Strong Sell) saw a loss in the quarter leaving many to ask: when will Amazon make money?
Amazon.com has its hands in many businesses. It is one of the Internet's largest retailers, a media company with publishing and video content, and a technology company with tablets, e-readers and cloud, among other things.
The company really can't be labeled in one category anymore. It is certainly more than just a book seller.
The company reported second quarter earnings on July 25 and missed the Zacks Consensus by 6 cents. It was expected to make $0.04 but posted a net loss of $7 million, or $0.02 per share.
Revenue rose 22% to $15.7 billion on strength in North America, especially in shoes and apparel and health and beauty. Customers are using the Prime program to buy items they once might have purchased at the local drugstore. Europe, however, remains weak.
Cubist Pharma Announces Acquisitions
In a bid to strengthen its antibiotics portfolio, Cubist Pharmaceuticals, Inc. (CBST-Free Report) announced its intention to acquire a couple of companies operating in the field. The first deal involves Optimer Pharmaceuticals, Inc. (OPTR-Free Report).
As per the terms of the deal, Optimer shareholders will receive $10.75 per share in cash (or $535 million) in addition to a contingent value right (CVR) for each share. The CVR will allow each shareholder to receive additional one-time cash payments of up to $5 per share in the event of certain sales milestones being achieved with respect to antibiotic Dificid. The CVRs are expected to be listed on the Nasdaq.
Cubist’s offer price of $15.75 per share (including the contingent payment) represents a premium of 18.5% to Optimer’s closing price on July 30. The deal, cleared by the boards of directors of both companies, is expected to close by Dec 31, 2013 and boost Cubist’s earnings in the first year following closure.
We note that Cubist and Optimer are no strangers to each other. The two companies co-promote Dificid in the U.S. treating patients suffering from clostridium difficile-associated diarrhea. Dificid is available in the U.S. since Jul 2011. The duration of the deal was initially two years and was consequently scheduled to expire at the end of this month. The companies have, however, extended the co-promotion deal by up to a year.
Cubist would gain full control of Dificid in the event of the merger materializing. Cubist has sufficient experience in marketing antibiotics. Cubicin, an antibiotic injection, is the growth engine at Cubist. Net sales of the product in the U.S. climbed 13.4% to $227.1 million in the second quarter of 2013. Cubicin performed well in international markets with sales of the drug climbing 31.6% to $15 million. The antibiotics pipeline at Cubist Pharma is also encouraging.
Cubist also announced its intention to purchase another antibiotics maker, Trius Therapeutics, for approximately $707 million. Including a contingent payment of $2.00 per share, the value of the deal, which is expected to close later in the year, can increase up to $818 million.
Cubist, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Companies such as Gilead Sciences Inc. (GILD-Free Report) (Zacks Rank #1) appear to be more attractive in the biopharma space.
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