For Immediate Release
Chicago, IL - April 24, 2012 - 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
US Airways Group Inc.
(
LCC
),
United Continental Holdings Inc.
(
UAL
),
Delta Airlines Inc.
(
DAL
),
Salix Pharmaceuticals, Ltd.
(
SLXP
) and
Progenics Pharmaceuticals, Inc.
(
PGNX
).
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Here are highlights from Monday's Analyst Blog:
Merger Relief for American Airlines
The rumors about American Airlines, a subsidiary of AMR Corp.,
merging with another airline have been heating up since the company
filed for bankruptcy protection in November last year. Finally, the
market buzz appears to be coming true with the three labor unions
of American Airlines supporting a plan for the bankrupt carrier's
merger with rival
US Airways Group Inc.
(
LCC
), the fifth largest U.S. airline.
This move represents a first step toward a consolidation, though
creditors, directors, and management are yet to give their green
signal.
The three unions - Allied Pilots Association, Association of
Professional Flight Attendants and Transport Workers Union -
represent as many as 55,000 employees at American Airlines.
According to them, the merger would save about 6,200 jobs as
opposed to what AMR Corp. can as a standalone entity, and speed up
the restructuring process.
We believe the potential American Airlines-US Airways merger
could change the competitive dynamics of the airline industry. The
combination would be strong enough in scope and size to compete
with their larger rivals,
United Continental Holdings Inc.
(
UAL
) and
Delta Airlines Inc.
(
DAL
). In fact, the combination would create an airline identical to
the largest U.S. air carrier, UnitedContinental, in terms of
revenue and traffic, and would be better than the second largest
airline, Delta.
Further, the new carrier would leapfrog other airlines in the
U.S. East Coast and Midwest. The potential combination would have
lesser overlapping routes. The consolidation of American Airlines,
if successful, would be the fourth in the last three years.
We see American Airlines-US Airways as the hottest pair in the
industry as it will be in the best interest of the customers.
Despite the long-standing problems with its pilot union, US Airways
has been a profitable airline for the past several years,
delivering best service to passengers with a top management team.
On the other hand, American Airlines is a loss-making entity for
several years due to its inefficient management team. In fact, it
is the worst air carrier in the industry in terms of customer
satisfaction.
Moreover, US Airways has been looking for a merger candidate
following its bankruptcy protection filing in 2002. The company
failed to acquire Delta, when it went bankrupt in 2006. As a
result, US Airways will see American Airlines' bankruptcy as a
great opportunity to take over its larger rival.
We believe this is an opportune moment for American Airlines to
consolidate in order to regain its lost profits and operational
efficiency. As United and Delta will be long-term beneficiaries
following the merger actions on both capacity and cost fronts, we
believe American Airlines will also emerge as a successful
candidate by balancing its debt level and lowering costs.
Nevertheless, any potential merger with AMR will take several
months or a year to materialize, as American Airlines is yet to
complete its court restructuring process and will undergo antitrust
scrutiny.
Effective early this year, the shares of American Airlines were
de-listed from the New York Stock Exchange. The company currently
has a Zacks #3 (Hold) Rank for US Airways for the short term (1-3
months).
Salix Lowered to Neutral
We recently downgraded
Salix Pharmaceuticals, Ltd.
(
SLXP
) to a Neutral recommendation with a target price of $51.00.
Although Salix' fourth quarter 2011 results exceeded expectations
with higher revenues boosting performance, the company provided
mixed guidance for 2012. While revenue guidance was above the Zacks
Consensus Estimate of $697 million, earnings guidance was well
below the Zacks Consensus Estimate of $2.63 per share. As a result,
the Zacks Consensus Estimate for 2012 declined by 33 cents to $2.30
per share. The company carries a Zacks #3 Rank (short-term 'Hold'
rating).
We expect Xifaxan (rifaximin), Salix' lead product, to continue
driving the top line. Xifaxan sales came in at $371.7 million in
2011, up 48.4%. We expect Xifaxan sales to exceed $420 million in
2012. We are pleased to see that Salix is working on developing new
indications for Xifaxan 550. We are also encouraged by Salix' plans
to develop a next generation rifaximin.
Salix has also been working on expanding its product portfolio
over the past few years through acquisitions and in-licensing of
candidates in late stage clinical development. The company has an
important regulatory event coming up later this month (April 27)
with the FDA expected to respond on the company's supplemental new
drug application (sNDA) for the use of Relistor in chronic
non-cancer pain patients with opioid-induced constipation.
Salix has plans to bring an oral formulation of Relistor to
market. The company presented impressive phase III data from a
study conducted in patients with chronic, non-cancer pain and
expects to file for approval in the third quarter of 2012. Salix
has an exclusive agreement with
Progenics Pharmaceuticals, Inc.
(
PGNX
) for the worldwide (excluding Japan) rights to Relistor.
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DELTA AIR LINES (
DAL
): Free Stock Analysis Report
US AIRWAYS GRP (
LCC
): Free Stock Analysis Report
PROGENICS PHARM (
PGNX
): Free Stock Analysis Report
SALIX PHARM-LTD (
SLXP
): Free Stock Analysis Report
UNITED CONT HLD (
UAL
): Free Stock Analysis Report
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