Andersons, Titan International, Shire, ViroPharma and BioCryst Pharmaceuticals highlighted as Zacks Bull and Bear of the Day
CHICAGO, Nov. 13, 2013 /PRNewswire/ -- Zacks Equity Research highlights Andersons, Inc. (Nasdaq:ANDE-Free Report)as the Bull of the Day and Titan International Inc. (NYSE:TWI-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheShire (Nasdaq:SHPG-Free Report), ViroPharma Inc. (Nasdaq:VPHM-Free Report) and BioCryst Pharmaceuticals, Inc. (Nasdaq:BCRX-Free Report).
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Here is a synopsis of all five stocks:
Diversification is paying off for The Andersons, Inc. (Nasdaq:ANDE-Free Report) as it posted a huge earnings beat in the third quarter on the strength of its rail and grain segments. This Zacks Rank #1 (Strong Buy) is expected to have double digit earnings growth in 2014.
The Andersons was founded in 1947 in Ohio. Originally a single grain elevator and truck terminal, it has grown into an agribusiness company with 6 business segments, including grains, ethanol, fertilizers, and turf.
It also has rail equipment leasing interests in Canada and Mexico where it repairs and manages 23,000 railcars and operates 4 stores in Toledo and Columbus, Ohio focusing on home goods.
For several years, The Andersons had been riding the fertilizer wave as fertilizer prices and demand soared to new highs. But in 2013, that story ended. For the pure fertilizer players, that meant earnings were pressured.
But The Andersons is more than just a fertilizer play.
On Nov 6, The Andersons reported its third quarter results and beat the Zacks Consensus by $0.30. Earnings were $0.91 compared to the consensus of $0.61.
The Ethanol Group saw a record operating income of $10.9 million on revenue of $213 million. It saw a loss of $0.9 million in the year ago quarter.
The Rail and Grain Groups were also strong which offset weakness in the Plant Nutrient Group which saw an operating loss of $1.6 million. Margins were still solid but volume was down significantly due to lower price trends and increased volatility in the fertilizer market.
Titan International Inc. (NYSE:TWI-Free Report) continues to suffer from a build-up in tire inventory in the farm and construction industry and weak pricing. This Zacks Rank #5 (Strong Sell) is expected to see a 50% earnings decline in 2013 on tough market conditions.
Titan International supplies wheels, tires and assemblies for off-highway equipment used in agriculture and earthmoving/construction.
When agriculture and mining was booming, tire sales were too. In 2011, the farmers took home record income and Titan's earnings jumped 253%.
But excess inventory that has been dropped into the aftermarket from the farm, construction and mining industries has impacted pricing.
On Oct 29, Titan reported third quarter results and missed for the fourth quarter in a row.
It was another big miss of 11 cents, or 44%. Earnings were $0.14 compared to the Zacks Consensus of $0.25.
Gross profit fell to 12.6% of net sales, or $62.5 million, from 16.6% of sales, or $67.2 million, in the third quarter of 2012.
Additional content:
Shire to Acquire ViroPharma
In a bid to strengthen its portfolio of rare disease drugs, Shire (Nasdaq:SHPG-Free Report) announced that it will acquire ViroPharma Inc. (Nasdaq:VPHM-Free Report) for approximately $50 per share or $4.2 billion.
The offer price of $50.00 per share represents a 27% premium to ViroPharma's closing share price of $39.38 on Nov 8, 2013, the last trading day prior to the acquisition announcement.
In addition to its existing cash balance, Shire expects to finance the acquisition with a $2.6 billion fully underwritten short-term bank facility and a revolving credit facility of $1.2 billion.
ViroPharma - A Strategic Fit
ViroPharma focuses on rare diseases. The growth story for ViroPharma revolves around Cinryze, which is approved in the U.S. for routine prophylaxis against angioedema attacks in adolescent and adults with hereditary angioedema (HAE).
Cinryze complements Shire's Firazyr which is indicated for the on-demand treatment of acute HAE attacks. Hence, the addition of Cinryze will bolster Shire's rare disease portfolio.
We note that ViroPharma was evaluating Cinryze for additional potential indications such as autoimmune hemolytic anemia, antibody-mediated rejection post renal transplantation and neuromyelitis optica.
The acquisition will also add Plenadren – indicated for the treatment of adrenal insufficiency (AI), and Buccolam – indicated for the treatment of pediatric seizures, to Shire's portfolio.
Further, ViroPharma's pipeline candidates include maribavir (for the treatment of cytomegalovirus infection in transplant patients), VP20621 (for the prevention of recurrent clostridium difficile infection) and VP-20629 (for Friedreich's Ataxia). Shire will decide on these programs after reviewing its resources.
ViroPharma forecasted net revenues between $445 million and $465 million in 2013. Cinryze revenues are projected between $395 million and $405 million.
Shire expects the addition of Cinryze to its rare disease business unit will propel the revenues to grow over $2 billion in 2014, accounting for approximately 40% of Shire's total product sales. Moreover, Shire expects to realize approximately $150 million of annual cost synergies across the business by 2015 from the acquisition. The acquisition is expected to be immediately accretive to Shire's bottom line.
Our Take
The news of the acquisition does not surprise us as rumors have been doing the rounds from the last four months leading to a massive surge in the share price of ViroPharma.
We are positive on Shire's acquisition of ViroPharma which will further strengthen its HAE franchise as Cinryze and Firazyr are two complementary therapies for the treatment of HAE.
However, we note that Cinryze's orphan drug exclusivity expires in 2015 in the U.S., opening the doors for competition thereby impacting sales. We remind investors that BioCryst Pharmaceuticals, Inc. (Nasdaq:BCRX-Free Report) has a candidate in its pipeline, BCX4161, which is being developed for HAE.
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