Medivation, Google, Facebook, Visteon and AMERCO highlighted as Zacks Bull and Bear of the Day
CHICAGO, July 25, 2013 /PRNewswire/ -- Zacks Equity Research highlights Medivation (Nasdaq: MDVN-Free Report) as the Bull of the Day and Google (Nasdaq: GOOG-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onthe Facebook (Nasdaq: FB-Free Report), Visteon (NYSE: VC-Free Report) and AMERCO INC (Nasdaq: UHAL-Free Report).
Here is a synopsis of all five stocks:
Looking for a biotech stock with the potential to steal major market share from Johnson & Johnson in a key disease market?
Then it's time to take a look at Medivation (Nasdaq: MDVN-Free Report), a $4 billion biopharmaceutical company based in San Francisco that is projected to turn profitable next year with a breakthrough drug treatment for prostate cancer.
The prostate cancer market represents huge commercial potential and Medivation's drug, Xtandi (enzalutamide), is already off to a strong start since its approval by the FDA last August. Launches in Europe and Asia will drive sales further, with projected revenues of $2 to $4 billion over the next five years.
According to the American Cancer Society, prostate cancer is the most commonly diagnosed cancer among men in the U.S., other than skin cancer. It is estimated by the American Cancer Society that about 242,000 new cases of prostate cancer were
Medivation's business model is to acquire promising technologies in the late preclinical development phase and develop them quickly and cost-effectively.
The approval and launch of Xtandi is a major milestone for the company which had previously faced failure with the development of another key pipeline candidate, dimebon (Alzheimer's disease and Huntington disease).
Should you buy or sell the monster of the web here at $900? Many institutional growth investors with a long-term horizon will keep their Google (Nasdaq: GOOG-Free Report) shares and probably even add to holdings here because they don't want to miss the ride to $1,000.
But the recent spate of downward earnings estimate revisions brought the GOOG down to a Zacks #5 Rank this week. And that means, at least in the short-term, there is reason to be cautious.
While the longer-term growth story may still be intact here, with 18% EPS growth projected for next year, the recent slash and burn of estimates should alert you to some simple warning signs.
First, once a big earnings miss and change in guidance occurs, it often takes time for the analyst community to react and catch up. Here, most of the 14 covering analysts reacted quickly. But it doesn't mean they are done "adjusting" their growth outlook.
Second, if the trend of downward EER continues, it could take another quarter or two of better news from the company before it turns around.
The question you have to ask is, "Do I want to accept the risk of owning the shares for 3-6 months while the company proves to the Street that things aren't so bad?"
Facebook Fixes Mobile, Kills Estimates
Now THAT'S how you hit an earnings report homerun! Facebook (Nasdaq: FB-Free Report) needed to take a few swings first, but finally posted its first giant earnings and revenue beat of its young publicly traded existence: GAAP earnings of $0.13 per share beat the Zacks Consensus Estimate of $0.09, and revenues skyrocketed to $1813 million past the expected $1610 million for Facebook's fiscal Q2.
Year over year, the numbers are truly phenomenal. (Then again, recall that FB's June 2012 quarter was a huge disappointment.) Ad revenues are up 61% from the year-ago quarter, with mobile ads now accounting for 41% of total ad revenue for the company. The "Facebook for Every Phone" initiative now sports more than 100 million active users, according to the company's press release.
You might go so far as to say Facebook has solved its "mobile problem."
Facebook also now has more than one million active advertisers, and its Instagram purchase now seems to be bearing fruit: upon the introduction of Instagram video, the site saw more than 5 million video uploads in the first 24 hours. As a result, revenues are up 53% year over year.
The Zacks ESP foresaw a quality positive earnings surprise for Facebook's Q2 (12 cents per share, or +33.33%), and the company even surpassed that by a penny. While there had been next to no analyst activity on estimate revisions over the past 60 days, the "most accurate" was for a 3-cent beat.
In all, very good news for a company considered dead in the water by some before it even got started. While the share price saw a 1.45% bump in regular trading Wednesday, after posting earnings, FB shares are up 19%.
Hey -- before you know it, Facebook might even start approaching its IPO price!
Ideas for Fresh Cash with the S&P Flirting with 1700
To be honest, I'm nervous about the ability of the equity market to continue with its sharp run up in the short term. The S&P 500 is flirting with 1700 and has rallied almost 9% from the June 24th low. Investors itching to put fresh cash to work may want to think about a screen of strong earnings and inexpensive valuation to navigate the investment waters.
In order to search for companies with value and earnings strength, I set up a screen looking for stocks with forward PE ratios of less than or equal to 14, an earnings surprise of at least 10% in the last reporting quarter, and a Zacks Rank #1 (Strong Buy). This simple screen feature and criteria was run on Zacks.com. Twenty six stocks fit the criteria.
Twenty six stocks are a lot to choose from. I decided to inject some discretion into the process. Given the run in financial names and the fact that finance companies can trade at "low" PE ratios, financials were thrown out of the mix. I also reviewed bar charts, looking for a setup which could support price strength.
Here are a couple names which caught my interest: Visteon (NYSE: VC-Free Report) and AMERCO INC (Nasdaq: UHAL-Free Report). Visteon is an auto supplier, AMERCO is a diversified company with a truck rental and insurance operation.
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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