For Immediate Release
Chicago, IL – November 10, 2010 – Zacks Equity Research highlights: Celgene Corporation (CELG) as the Bull of the Day and Skechers USA (SKX) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dean Foods Co. (DF), Priceline.com Inc (PCLN) and JA Solar Holdings Co. Ltd (JASO).
Full analysis of all these stocks is available at http://at.zacks.com/?id=5506.
Here is a synopsis of all five stocks:
Bull of the Day:
Celgene Corporation's (CELG) third quarter 2010 earnings of $0.65 per share was above the Zacks Consensus Estimate by $0.01 and the year-ago earnings by $0.17. The impressive showing was primarily due to strong sales of Celgene's cancer products, Revlimid and Vidaza.
The strong showing caused the company to raise its 2010 guidance. Celgene boosted its already impressive cancer portfolio by acquiring Abraxis BioScience and Gloucester Pharmaceuticals this year. Moreover, the company possesses a robust pipeline which, if developed and commercialized successfully, should boost the top line.
These positive catalysts cause us to upgrade the stock to Outperform. Based on the third quarter performance, we have raised our earnings estimates for 2010 by $0.08 to $2.53 and 2011 estimates by $0.13 to $3.10.
Bear of the Day:
Skechers USA's (SKX) third-quarter 2010 results missed the Zacks expectations for top and bottom lines, reflecting sluggish sales trends and order cancellations. Consequently, total inventories increased 70.3% to $326.7 million over the prior-year quarter.
Management hinted that extended delivery times also led to the inventory pile-up. Following the earnings release, the Zacks Consensus Estimates have been falling, with analysts remaining bearish on the stock, prompting us to revise our recommendation. We now expect the stock to Underperform.
However, Skechers indicated that it would try to lower its inventory level over the next two quarters, while generating reasonable margins. We believe that international business should act as a catalyst to normalize the inventory level.
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Dean Foods Misses on Higher Costs
Dean Foods Co.'s (DF) adjusted earnings per share for the third quarter of fiscal 2010 came in at 13 cents, well behind 33 cents recorded in the year-ago quarter and the Zacks Consensus Estimate of 21 cents per share.
On a reported basis, including one-time items, third-quarter 2010 earnings plummeted 51.1% to $24.3 million from $49.7 million in the year-ago period.
Meanwhile, Dean Foods' quarterly net sales grew 11.0% year over year to $3.1 billion, in line with the Zacks Consensus Estimate. The growth was primarily a pass-through of higher commodity costs at Fresh Dairy Direct-Morningstar to consumers in the form of higher prices. In terms of segments, sales from Fresh Dairy Direct–Morningstar grew 11% year over year to $2.6 billion, while WhiteWave–Alpro division sales increased 8% to $478.3 million.
Quarterly gross profit declined 4.6% year over year to $749.6 million, while gross margin contracted 390 basis points (bps) to 24.5%. The margin reduction was primarily caused by insufficient pass-through of higher commodity costs. Dean Foods' operating expenses rose 1.4% to $657.1 million from $648.0 million in the year-ago period. Accordingly, operating income during the quarter slipped 35.0% year over year to $103.1 million.
3Q Results Boost Priceline Shares
Priceline.com Inc's (PCLN) third quarter earnings -- including stock based compensation and excluding other items -- missed the Zacks Consensus by 11 cents. However, excluding stock based compensation, earnings easily beat our expectations and management guidance.
Priceline's estimates for the quarter edged up a couple of cents in the 30 days leading up to the earnings announcement, reflecting the higher expectations attached to the online travel industry.
Priceline's results in the quarter were driven by better-than expected revenue, which was the result of very strong growth across the Asia/Pacific, Europe and North America regions. All product lines except air tickets contributed to the growth. Priceline's booking.com and Agoda did particularly well in the last quarter.
As a result, Priceline shares were up over 8% in Tuesday trading.
Strong Numbers from JA Solar
JA Solar Holdings Co. Ltd (JASO) reported adjusted earnings per American Depositary Share (EPADS) of 47 cents in its third quarter, which surpassed the Zacks Consensus Estimate of 34 cents. Results also comfortably beat the year-ago adjusted earnings per ADS of 10 cents.
Outlook
JA Solar raised its shipments guidance range for fiscal 2010 to over 1.45 GW, compared with the prior guidance of 1.35 GW. Shipments in the fourth quarter of 2010 are expected to be approximately 450 MW.
Our Take
JA Solar is one of the most cost-efficient solar producers in the world, with a geographically diverse customer base as well as silicon wafer supply agreements in place to support its production. Positive factors include ongoing expansion programs, improving operating efficiencies, rising margins and higher conversion efficiency.
JA Solar at the end of the reported quarter had expanded its annual cell manufacturing capacity to 1.8 GW. The company expects robust demand for its products from both existing and new customers. The company is steadily expanding its customer base worldwide, with strong growth in several geographic end markets including, U.S., Canada, Italy, Japan, Australia, China and India.
The company had already signed supply agreements with multiple customers for 2011 product delivery that exceeds1.2 GW, and has received prepayments associated with these supply agreements, further improving its future order visibility.
We currently have a long-term Outperform recommendation on the stock. JA Solar has a Zacks #1 Rank, a short-term Strong Buy rating on the stock.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.
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.
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CELGENE CORP (CELG): Free Stock Analysis Report
DEAN FOODS CO (DF): Free Stock Analysis Report
JA SOLAR HOLDGS (JASO): Free Stock Analysis Report
PRICELINE.COM (PCLN): Free Stock Analysis Report
SKECHERS USA-A (SKX): Free Stock Analysis Report
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