For Immediate Release
Chicago, IL – October 16, 2013 – Zacks Equity Research highlights Rite Aid Corporation ( RAD- Free Report ) as the Bull of the Day and American Capital ( ACAS- Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Bayer ( BAYRY- Free Report), Compugen Ltd. ( CGEN- Free Report) and Seattle Genetics Inc. ( SGEN- Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Rite Aid reported excellent quarterly results buoyed by strong sales growth and expanding margins. Earnings estimates have thus surged, sending this drugstore chain to Zacks rank #1 (Strong Buy).
Rite Aid Corporation ( RAD- Free Report ) is the third largest retail drugstore in the U.S., based on revenues and number of stores. More than 25% of the U.S. population visits RAD’s 4,604 stores at least once a year. The company s pharmacy operations accounted for 67.6% of fiscal 2013 total sales.
The company reported its operating results for its fiscal second quarter ended August 31 on September 20, 2013. Revenues for the quarter increased 0.8% primarily as a result of an increase in same store sales, partially offset by store closings.
Net income for the quarter was $32.8 million or compared with a net loss of $38.8 million during the same quarter last year. The improvement in net income was primarily a result of an increase in adjusted EBITDA and a decrease in interest expense, partially offset by the loss on debt retirement.
Bear of the Day:
Estimates have come down after disappointing second quarter results, sending ACAS to a Zacks Rank # 5 (Strong Sell), with an “Underperform” recommendation.
About the Company
American Capital ( ACAS- Free Report ) is global private finance investor and alternative asset manager. Founded in 1986, the company had $21 billion in earning assets under management as of June 30, 2013. Headquartered in Bethesda, Maryland, ACAS has 8 offices and 367 employees in the U.S. and Europe.
The company has been able to grow its earnings AUM significantly, thanks mainly to two of its public funds, American Capital Agency and American Capital Mortgage (both mortgage REITs).
American Capital reported its second quarter operating results on July 31, 2013. Net operating income for the quarter was $0.16 per share, substantially worse than the Zacks Consensus Estimate of $0.25 per share. This was the company’s second consecutive miss. ACAS has delivered an average negative surprise of 21.6% in the last four quarters.
Total operating revenue for the quarter was $130 million, down 20% from $163 million in the prior-year quarter, due to lower interest and dividend income. Further, operating revenue was below the Zacks Consensus Estimate of $139 million.
Bayer in Oncology Deals
Bayer’s ( BAYRY- Free Report) HealthCare segment was very active in the last few quarters on acquisitions and collaborations. The company has entered into several agreements to boost its product portfolio.
Earlier in the month, Bayer entered into a master collaboration agreement with Sysmex Inostics GmbH, a diagnostic company, for the development of companion diagnostics for targeted cancer therapies. As per the agreement, Sysmex Inostics’ innovative blood-based companion diagnostic solutions will be used to develop Bayer’s anti-cancer agents. Bayer however did not mention any financial details pertaining to the agreement.
In Aug 2013, Bayer entered into another oncology collaboration and licence agreement with Compugen Ltd. ( CGEN- Free Report) for an upfront payment of $10 million. The collaboration agreement is for the research, development, and commercialization of antibody-based therapeutics for cancer immunotherapy against two novel immune checkpoint regulators discovered by Compugen.
Per the terms of the agreement, Bayer will gain full development and worldwide commercialization rights to the potential cancer therapeutics, after jointly conducting a preclinical research program with Compugen.
Moreover, in Jun 2013, the company inked a collaboration agreement with Seattle Genetics Inc. ( SGEN- Free Report) that allowed the former to gain worldwide rights to Seattle Genetics’ auristatin-based antibody-drug conjugate ( ADC) technology along with antibodies to several oncology targets. As per the terms of deal, Bayer will be responsible for the development, manufacturing and commercialization of all products under the agreement.
We are encouraged by the company’s collaboration agreements. The collaborations are expected to strengthen Bayer’s oncology portfolio.
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