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The Zacks Analyst Blog Highlights: RadioShack, Amazon.com, Best Buy, Conns and Alkermes

Zacks Equity Research

For Immediate Release
Chicago, IL – March 10, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the RadioShack Corp. (RSH-Free Report), Amazon.com Inc. (AMZN-Free Report), Best Buy Co., Inc. (BBY-Free Report), Conns Inc. (CONN-Free Report) and Alkermes (ALKS-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday’s Analyst Blog:

RadioShack Shutting Stores as Sales Dip

The struggling American franchise of electronics retail stores, RadioShack Corp. (RSH-Free Report) is planning to close 1,100 unprofitable outlets after the company reported dismal numbers for the eighth consecutive quarter.

Earlier, RadioShack undertook 5 strategies to restructure its business model which include redefining the brand, revamping product assortment, reinvigorating stores, achieving operational efficiency and attaining financial flexibility.

The company’s decision to shut underperforming stores is part of its strategy to bring the company back on the growth track. After shutting down nearly 20% its outlets the company’s operating expenses are expected to reduce. However, until the comparable store sales improve, a drastic turnaround in its business is impossible. RadioShack is facing stiff competition from retail giants like Amazon.com Inc. (AMZN-Free Report), Best Buy Co., Inc. (BBY-Free Report) and Conns Inc. (CONN-Free Report).

RadioShack’s core Consumer Electronics retail business is on a secular downtrend. Nowadays, consumers prefer making online purchases to visiting retail stores. Consequently, the rising trend of shopping through tablets and smartphones is lowering profits of the retail industry.

In the recently concluded quarter, the company’s top and bottom line missed the respective Zacks Consensus Estimate. More importantly, the company’s comparable store sales for the operated stores and kiosks (stores and kiosks that have been operational for at least a year) declined 19%.

This is a key retail performance indicator measuring growth from the existing sales locations. Free cash flow, in the reported period, was a negative $6.5 million against $110.8 million in the prior-year quarter. Thus, the shutting down of stores is expected to increase cash flow and improve margins going forward.

RadioShack currently has a Zacks Rank #3 (Hold).

Pipeline Progress at Alkermes
Alkermes (ALKS-Free Report) announced that it has initiated a pivotal program to evaluate its major depressive disorder (MDD) candidate, ALKS 5461. The pivotal program, FORWARD (Focused On Results With A Rethinking of Depression) will evaluate ALKS 5461 in patients who did not respond satisfactorily to currently available therapies.
FORWARD comprises three core phase III efficacy studies and nine supportive studies to evaluate the long-term safety, dosing, pharmacokinetic profile and abuse potential of ALKS 5461. The company has already commenced the first FORWARD study (n = 60) to evaluate the onset of action, safety and tolerability profile of the candidate. The three core efficacy studies are expected to be initiated in mid 2014.
Alkermes plans to submit a New Drug Application (:NDA) for ALKS 5461 to the U.S. Food and Drug Administration (:FDA) based on efficacy and safety data from the FORWARD program.
Earlier, in Apr 2013, Alkermes had reported encouraging top-line data from a phase II study (n=142) on ALKS 5461. The study evaluated the safety and efficacy of ALKS 5461 across two doses for the treatment of MDD in patients who show inadequate response to currently available therapies. Results from the study revealed that depressive symptoms were reduced across a range of standard measures. ALKS 5461 was well tolerated during the study.
We note that the candidate enjoys a Fast Track designation in the U.S.
Our Take
We are encouraged by Alkermes’ efforts to develop its pipeline.
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