For Immediate Release
Chicago, IL - December 9, 2011 - Zacks Equity Research
highlights
SIRIUS XM Radio
(
SIRI
) as the Bull of the Day and
Meritor, Inc.
(
MTOR
) as the Bear of the Day. In addition, Zacks Equity Research
provides analysis on
Dendreon Corporation
(
DNDN
),
Merck, Inc.
(
MRK
) and
Roche
(
RHHBY
).
Full analysis of all these stocks is available at
http://at.zacks.com/?id=2678
.
Here is a synopsis of all five stocks:
Bull of the Day
:
We upgrade our recommendation on
SIRIUS XM Radio
(
SIRI
) to Outperform, based on its huge subscriber additions, launch of
new SIRIUS XM 2.0 radio, improved credit ratings and better
financial outlook. The company reported highly improved financial
results for the third quarter of 2011, beating both the top and
bottom line Zacks estimates.
Moreover, the company will get pricing flexibility starting this
quarter, after the completion of a stipulated FCC regulation. The
pricing flexibility will be a great boost for the company's
top-line growth.
Huge subscriber additions coupled with an upgraded S&P
credit rating from BB- to BB and the launch of new SIRIUS XM 2.0
will drive the stock going forward. We thus upgrade our rating to
Outperform with a price target of $2, based on 28.6x our fiscal
2011 earnings estimate.
Bear of the Day
:
Meritor, Inc.
(
MTOR
) is a globally recognized automotive parts supplier. However, the
company has high customer concentration, which implies limited
scope for margin expansion. Further, the recent turmoil in the
global economy is expected to continue to mar its results.
We are also disappointed about Meritor's deteriorating cash
flow. Although the company's fiscal fourth quarter profit was ahead
of the Zacks Consensus Estimate by $0.19 per share, we remain
concerned about its long-term outlook.
Our long-term Underperform recommendation on the stock indicates
that it will perform lower than the broader market. Our $5.50
target price, 3.8X our 2012 EPS estimate, reflects this view.
Latest Posts on the Zacks
Analyst Blog
:
Dendreon to Sell Victrelis Rights
Dendreon Corporation
(
DNDN
), which is currently going through a rough patch, tried a hand at
improving its financial position. This time, Dendreon has entered
into a deal to sell its royalty interest in
Merck, Inc.
's (
MRK
) hepatitis C product Victrelis. Dendreon acquired the intellectual
property rights to Victrelis in July 2003 from Merck and
co-developer Corvas International, Inc.
The Victrelis royalty rights were bought by CPPIB Credit
Investments Inc., a wholly owned subsidiary of CPP Investment Board
(CPPIB), for $125 million in cash. CPPIB is a professional
investment management organization which manages funds for the
Canada Pension Plan. The deal is expected to close by the end of
this year.
We believe that the sale of this royalty interest will
strengthen Dendreon's cash position which is currently struggling
from a dismal performance of its prostate cancer vaccine, Provenge.
In a similar drive to bolster its finances, Dendreon announced in
September this year that it will lay off almost a quarter of its
workforce as part of a drastic restructuring plan. The plan was
announced to reduce spending to cope with disappointing Provenge
sales.
Victrelis is approved for the treatment of chronic hepatitis C (
CHC
) who are previously untreated or who have failed previous
interferon and ribavirin therapy. Victrelis is the first in a new
class of medicines known as hepatitis C virus (HCV) protease
inhibitors to gain approval. Victrelis is approved in the US, EU
and Brazil. Merck has an agreement with
Roche
(
RHHBY
) for the global marketing of Victrelis as part of a triple
combination therapy.
Our Recommendation
We currently have a Neutral recommendation on Dendreon. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.
The successful commercialization of Provenge is crucial for the
financial performance of Dendreon as it can drive the company to
profitability. Though we still have faith in the long-term
prospects of Provenge, the drug has so far failed to live up to
expectations, clouding our visibility for the next few quarters. We
believe the stock will remain range bound for some time and prefer
to remain on the sidelines until visibility on Provenge's
performance improves. Moreover, in the long run, we remain
concerned about the company's dependence on Provenge and the lack
of a decent pipeline. We believe Dendreon has little to fall back
on if Provenge falls short of expectations. We also remain cautious
on the continuous uptick in operating expenses, particularly in the
light of Provenge's weak performance.
Get the full analysis of all these stocks by going to
http://at.zacks.com/?id=2649
.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two
stocks that are likely to outperform (Bull) or underperform (Bear)
the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the
Analyst Blog
provides analysis from Zacks Equity Research about the latest news
and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and
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Continuous analyst coverage is provided for a universe of 1,150
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which gives them keen insights to developments that affect company
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are six-month time horizons.
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DENDREON CORP (
DNDN
): Free Stock Analysis Report
MERCK & CO INC (
MRK
): Free Stock Analysis Report
MERITOR INC (
MTOR
): Free Stock Analysis Report
SIRIUS XM RADIO (
SIRI
): Free Stock Analysis Report
Zacks Investment
Research