Genpact,Bebe Stores, Merck, Akorn and Bayer highlighted as Zacks Bull and Bear of the Day
CHICAGO, May 15, 2014 /PRNewswire/ -- Zacks Equity Research highlights Genpact Ltd. (NYSE:G-Free Report) as the Bull of the Day and Bebe Stores (Nasdaq:BEBE-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onMerck (NYSE:MRK-Free Report), Akorn, Inc. (Nasdaq:AKRX-Free Report) and Bayer (OTC:BAYRY-Free Report).
Here is a synopsis of all five stocks:
Genpact Ltd. (NYSE:G-Free Report) is a Business Process Services provider—providing business process outsourcing (BPO) and IT services—mainly to financial services and manufacturing industries. It began as a unit of GE in 1997, was spun-off in 2005 and listed on the NYSE in 2007.
Headquartered in New York, the company has more than 70 delivery centers and 63,000 employees in 18 countries.
Genpact reported its first quarter results on May 5, 2014. The company closed the quarter with revenues of $528.2 million, up 4.8% year-over-year and 6.6% year-over-year in constant currency terms.
Four of the target verticals--capital markets, CPG, life science, and healthcare--led growth during the quarter. Net income was $50.6 million, or $0.21 per share, up from $46.7 million and $0.20 per share in the first quarter of 2013.
Adjusted net earnings came in at $0.22 per share, ahead of the Zacks Consensus Estimate of $0.20 per share. Genpact has delivered positive surprises in all of the last four quarters with an average quarterly surprise of 22.25%.
Incorporated in 1976, Bebe Stores (Nasdaq:BEBE-Free Report) designs, develops and produces contemporary women's apparel and accessories. They market their products under bebe, BEBE SPORT and 2b brand names through their retail stores located in the United States, Canada and internationally licensed stores.
BEBE reported its Q3 fiscal 2014 results on May 8, 2014. Net sales were down 17.2% to $93.5 million from $112.9 million in the prior-year quarter. Comparable store sales for the quarter ended Apr 5, 2014, fell about 5.7%.
Sales decline was primarily due to the loss of a retail week in January, coupled with the shutdown of 19 non-performing stores, since Q3 last fiscal year.
Results were also greatly impacted by adverse weather conditions, which led to nearly 136 temporary store closures. Moreover, the shift of Easter into late April had a negative impact on the company's Q3 sales.
Net loss for the quarter was $24.3 million, or $0.31 per share, compared to prior-year quarter loss of $49.3 million or $0.62 per share.
For Q4, Bebe forecasts same store sales to be flat. Gross margin is expected to improve sequentially, while net loss is expected to be in the mid-teens per share range.
As a result of the earnings miss and weak guidance, analysts have been revising their estimates downwards in the last few days. Zacks consensus estimate now calls for a loss of $0.67 per share for the current fiscal year and a loss of $0.28 per share for the next year, compared to a loss of $0.46 per share and $0.16 per share respectively, 30 days ago.
Additional content:
Merck Continues to Divest from Ophthamology
Merck (NYSE:MRK-Free Report) entered into an agreement with Santen Pharmaceutical Co., Ltd. to divest its ophthalmology products including Cosopt, Cosopt PF, Trusopt, Trusopt PF, Timoptic, Timoptic PF, Timoptic XE, Saflutan and Taptiqom in Japan and key markets in Europe and Asia-Pacific. The agreement is expected to close in most markets in the next few months.
These ophthalmology products generated annual sales of approximately $400 million in the above-mentioned territories. We note that the patent for Cosopt has expired in a number of major European markets in Mar 2013. Sales are expected to decline in those markets.
As per the terms of the deal, Santen will pay for supply of these ophthalmology products from Merck for the next two to five years. Merck will receive an upfront payment of approximately $600 million from Santen. Santen will make additional payments based on defined sales milestones as needed.
We note that this is not the first time that Merck has decided to divest its ophthalmology products. Last November, the company had sold the rights to ophthalmic products --Cosopt, Cosopt PF and AzaSite -- in the U.S. to Akorn, Inc. (Nasdaq:AKRX-Free Report). These ophthalmology products generated annual sales of approximately $45 million in the U.S.
Meanwhile, the company stated that it will continue to sell its ophthalmology products in Latin America, Canada, Australia, the Middle East, Africa and other markets.
We believe that the divestments are in line with Merck's ongoing strategy to streamline its operations and improve operational efficiencies. Earlier this month, Merck entered into an agreement with Bayer (OTC:BAYRY-Free Report) to sell its consumer care business for $14.2 billion.
Merck carries a Zacks Rank #3 (Hold).
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