Biogen Idec Inc., Elan Corporation, Chevron Corporation, CNOOC Ltd., and ExxonMobil Corporation highlighted in Zacks Analyst Blog

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Jan 18, 2013, 09:30 ET

CHICAGO, Jan. 18, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Biogen Idec Inc. (BIIB), Elan Corporation (ELN), Chevron Corporation (CVX), CNOOC Ltd. (CEO) and ExxonMobil (XOM).

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Here are highlights from Friday's Analyst Blog:

Biogen, Elan Seek Label Expansion

Biogen Idec Inc. (BIIB) and partner Elan Corporation (ELN) recently submitted applications to the US Food and Drug Administration (FDA) and European Medicines Agency (EMA) seeking to update the label of their multiple sclerosis (MS) drugTysabri (natalizumab).

The companies are looking to get Tysabri approved as a first line treatment for patients suffering from certain relapsing forms of multiple sclerosis (MS) who have tested negative for antibodies to the JC virus (JCV).

The application is based on risk stratification data. Tysabri slows disability progression by 42% – 54% and reduces annualized relapse rates by 68%.

Tysabri is the primary growth driver at Elan. As per Elan, Tysabri global net sales in the third quarter of 2012 rose 9.8% to $306.4 million. However, third quarter 2012 Tysabri revenues at Biogen declined 1% to $275 million.

We note that Tysabri is approved in the US for treating relapsing forms of multiple sclerosis (MS) in patients who show inadequate response to or are unable to tolerate other treatments. In the EU, Tysabri is approved for treating highly active relapsing-remitting MS (RRMS) in adults who have severe RRMS or have not responded to beta interferon treatment.

In the EU, Tysabri was approved in 2006 and in the US it was initially approved in 2004. The product was withdrawn from US markets in 2005 due to the progressive multifocal leukoencephalopathy (PML) concern. The drug was reintroduced by Biogen and Elan after a year with a strict warning regarding the occurrence of PML.

We currently have a Neutral recommendation on both Biogen and Elan. While Biogen carries a Zacks Rank #3 (Hold) in the short run, Elan carries a Zacks Rank #2 (Buy).

Chevron to Explore in China

Chevron China Energy Company – subsidiary of the U.S. energy behemoth Chevron Corporation (CVX) – entered into two production sharing agreements with China National Offshore Oil Corporation – parent company of the Chinese energy giant CNOOC Ltd. (CEO).

The contracts are for the exploration of blocks 15/10 and 15/28 located in Xijiang Sag of Pearl River Mouth Basin in the eastern part of the South China Sea. Together, the blocks cover an area of about 2,233 square miles in water depth of 50–100 meters.

Per the deals, Chevron will have 100% stake in both the shallow water blocks, while CNOOC will have the right to share up to 51% in any commercial discovery. Chevron will operate both the blocks and will carry out 3D seismic data surveys. The cost of the same will be borne by Chevron. No other financial term was disclosed.

This deal is a part of the strategic move by Chevron to develop its business in the Asia Pacific region.

Chevron is currently a Zacks Rank #3 (Hold) stock, implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months. We are also maintaining our long-term Neutral recommendation on the stock.

The energy giant's current oil and gas development project pipeline is among the best in the industry, boasting large and multi-year projects. Additionally, this second-largest U.S. oil company by market value after ExxonMobil Corporation (XOM) possesses one of the healthiest balance sheets among its peers that help it to capitalize on strategic investment opportunities.

However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from any weakness in the global economy. We are also concerned about the company's high level of capital spending, which may result in reduced returns going forward.

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