Burlington Stores, Quiksilver, Hospira, Mylan and Gilead Sciences highlighted as Zacks Bull and Bear of the Day
CHICAGO, Sept. 10, 2014 /PRNewswire/ -- Zacks Equity Research highlights Burlington Stores, Inc. (NYSE:BURL-Free Report) as the Bull of the Day and Quiksilver, Inc. (NYSE:ZQK-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Hospira (NYSE:HSP-Free Report), Mylan (Nasdaq:MYL-Free Report) and Gilead Sciences (Nasdaq:GILD-Free Report).
Here is a synopsis of all five stocks:
Burlington Stores, Inc. (NYSE:BURL-Free Report) escaped the second quarter relatively unscathed as same store sales and gross margin both rose. This Zacks Rank #1 (Strong Buy) is bucking the negative retail trend, as it is expected to see double digit earnings growth this year and next.
Burlington Stores operates an off-price retail chain with 470 stores in 44 states and Puerto Rico.
While the company goes under the name Burlington Stores, most people know it by the name Burlington Coat Factory. In addition to coats, however, it carries clothing and shoes as well as linens and home decor.
On Sep 9, Burlington Stores reported its fiscal second quarter results and bucked the negative trend of many of the retailers this earnings season by easily beating the Zacks Consensus by $0.08. Earnings were a loss of $0.01 compared to the Zacks Consensus of a loss of $0.09.
Same store sales jumped 47.% as gross margin expanded 50 basis points to 38.2% from 37.7% in the second quarter of fiscal 2013.
Quiksilver, Inc. (NYSE:ZQK-Free Report) recently posted its second big miss in a row as the retail environment remains challenging. This Zacks Rank #5 (Strong Sell) is trying to turn it around but shares have plunged to a 5-year low.
Quiksilver began in the 1970s as a boardshort company and has evolved into a complete California-based lifestyle company producing apparel, footwear and accessories primarily through 3 brands: Quiksilver, DC and Roxy.
Its products are sold in 100 countries in surf and snow shops, department stores and through its own retail shops.
On Sep 4, Quiksilver reported its third quarter results and missed the Zacks Consensus for the fourth quarter in a row. This miss was a big one though, as the company lost $0.20 versus the consensus estimate of a gain of $0.03.
Revenue fell 19% to $396 million from $$488 million a year ago. Wholesale got crushed, falling 30% to $235 million.
Quiksilver expected the decline in its wholesale channels in North America and Europe. But it also had a problem with late product deliveries, which impacted sales performance and gross margins.
Gross margin decreased to 47.8% from 49.1% due to discounting in some wholesale markets.
Additional content:
Hospira Down on Generic Drug Court Ruling
Hospira (NYSE:HSP-Free Report) was dealt a legal blow by the U.S. District Court which ruled that companies like Mylan (Nasdaq:MYL-Free Report) are free to resume sales of their generic versions of Hospira's injectable sedative Precedex (dexmedetomidine hydrochloride). The adverse court ruling resulted in Hospira's shares closing the trading session on Sep 9 at $52.72, down 2.19%.
The Story So Far
Hospira has been in the news regarding Precedex for quite a while now. Last month, the FDA granted approval to companies like Mylan to launch their generic versions of the product. However, Hospira filed a lawsuit against the FDA over the issue (read more: Hospira Sues FDA on Generic Precedex Approval, Shares Down).
Subsequently, the U.S. District Court issued a temporary restraining order against the U.S. regulatory body's decision to allow the sale of the generic versions of Precedex. The companies which had started to market their generic versions of Precedex following the FDA approval were barred from doing so as a result of the restraining order.
Joy Short lived, Job Cuts Ahead?
However, the joy at Hospira turned out to be short lived with the latest verdict going against the company. Following the entry of generic versions of Precedex, sales of the drug, which accounted for 11% of Hospira's global net sales in 2014, will go down. This will hurt the top line. The company has challenged the latest decision and has maintained its 2014 adjusted earnings per share guidance of $2.30 to $2.50. The Zacks Consensus Estimate of $2.40 per share is well within the guidance range.
We expect Hospira to resort to job cuts to lessen the impact of genericization of Precedex on the bottom line. We remind investors that Hospira had warned earlier that it might have to lay off its entire branded U.S. sales team of approximately 130 employees in the event of Precedex going generic. We fear that Hospira will turn its statement into reality in the wake of the adverse ruling. Investors are likely to be glued to updates on Precedex, going forward.
Hospira carries a Zacks Rank # 3 (Hold). Better-ranked stocks in the health care sector include Gilead Sciences (Nasdaq:GILD-Free Report), which sports a Zacks Rank #1 (Strong Buy).
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