For Immediate Release
Chicago, IL –August 03, 2010 – Zacks Equity Research highlights: Neurocrine Biosciences (NBIX) as the Bull of the Day and Big 5 Sporting Goods (BGFV) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Aetna Inc. (AET), CVS Caremark (CVS) and Express Scripts Inc. (ESRX).
Here is a synopsis of all five stocks:
With a strong financial position, we believe Neurocrine Biosciences (NBIX) is in outstanding position to build shareholder value over the next several years.
The company exited the second quarter with $145.5 million in cash and receivables, with the potential to earn several hundred million more as clinical development progresses. The company's dramatically improved financial position affords management the opportunity to push forward the development of internal pipeline candidates, including VMAT-2, as well as in-license new pre-phase II molecules within the company's core CNS focus.
We recommend accumulating the stock at today's price, up to our $9 target.
Big 5 Sporting Goods (BGFV) posted a 0.5% decline in same-store sales during the second quarter of 2010, missing its own prediction of low-single digit growth. Consequently, the company slashed its earnings guidance for the second quarter to $0.20 - $0.23 per share from the earlier forecast of $0.24 - $0.30 per share.
Big 5 Sporting also encounters intense competition from national chains, mass merchandisers and regional stores, which exerts severe pressure on its profitability. Moreover, the seasonal nature of its business and risks associated with sourcing from foreign countries also undermine the company's future operating performance.
Accordingly, we downgrade our recommendation on Big 5 Sporting Goods to Underperform from Neutral as we anticipate it to perform well below the broader market.
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Aetna, CVS Strike Deal
Last week, health insurer Aetna Inc. (AET) announced that it has entered into a 12-year contract with pharmacy benefit manager (PBM) CVS Caremark (CVS).
Pursuant to the agreement, Caremark will act as a PBM of Aetna’s prescription drug program for its Pharmacy Benefit Unit. In the United States, a PBM is a third-party administrator of prescription drug programs who are primarily responsible for processing and paying prescription drug claims.
Caremark will take on responsibility for 9.7 million of Aetna’s members, besides being responsible for developing and maintaining the formulary, contracting with pharmacies, and negotiating discounts and rebates with drug manufacturers.
The contract will help Aetna lower medical costs for its members on the back of price discounts from retail pharmacies, rebates from pharmaceutical manufacturers, and the efficiencies of mail-service pharmacies. Thus customers will be able to enjoy more attractive pricing along with access to Caremark’s vast network.
Turning to numbers, for the rest of 2010, the company expects to incur 6 cents per share as a one-time cost. The arrangement will eventually boost Aetna’s profit after the completion of integration at the end of 2011. Management expects the pact to add 30 cents to earnings per share once the service is fully functional in 2012.
From Caremark’s point, the deal might turn out to be the light at the end of its tunnel after losing business last year. Besides Aetna, other recent client additions were the Massachusetts Group Insurance Commission and Capital BlueCross in Pennsylvania, both of which were handled by competitor Express Scripts Inc. (ESRX).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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AETNA INC-NEW (AET): Free Stock Analysis Report
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NEUROCRINE BIOS (NBIX): Free Stock Analysis Report
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