The Zacks Analyst Blog Highlights: Bristol-Myers Squibb, Sanofi, Eli Lilly, Gilead Sciences and Logitech International

Apr 23, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, April 23, 2013 /PRNewswire/ -- 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 Bristol-Myers Squibb Company (NYSE: BMY), Sanofi (NYSE: SNY), Eli Lilly and Company (NYSE: LLY), Gilead Sciences Inc. (Nasdaq: GILD) and Logitech International SA (Nasdaq: LOGI).


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Here are highlights from Monday's Analyst Blog:

Bristol-Myers Likely to Report In-Line

We expect Bristol-Myers Squibb Company (NYSE: BMY) to report in line first-quarter 2013 results before the opening bell on Apr 25.

Factors to Consider this Quarter

The genericization of Plavix (May 17, 2012) and Avapro (Mar 2012) in the US has resulted in significant loss of revenues for Bristol-Myers. Bristol-Myers co-developed both drugs with Sanofi (NYSE: SNY). Bristol-Myers is looking to combat the generic threat hanging over its key drugs through partnering deals and acquisitions and introducing new products to augment its product portfolio. In Dec 2012, the US Food and Drug Administration cleared blood thinner Eliquis. Successful commercialization of Eliquis should boost Bristol-Myers' top line significantly since the drug offers great commercial potential. Moreover, in Aug 2012, Bristol-Myers acquired Amylin Pharmaceuticals, Inc. in a bid to diversify its business to combat the generic threat and bolster its position in the lucrative diabetes market.

The efforts of Bristol-Myers notwithstanding, first-quarter 2013 results will likely continue to be hurt by the genericization of Plavix and Avapro. The company has delivered mixed results over the last four quarters, missing estimates in two.

The Zacks Consensus Estimate for the first quarter has moved down by two cents to 43 cents per share over the last 30 days.

Earnings Whispers?

Our proven model does not conclusively show that Bristol-Myers is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen.

Zacks ESP:The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and Zacks Consensus Estimate currently stand at 41 cents.

Zacks Rank #3 (Hold): Bristol-Myers' Zacks Rank #3 lowers the predictive power of ESP because the Zacks Rank #3 when combined with an ESP of 0.00% indicates the possibility of in line results.

Stocks to Consider

Here are some other stocks you may want to consider as our model shows these have the right combination of elements to post an earnings beat this season:

Eli Lilly and Company (NYSE: LLY) has an Earnings ESP of +3.85% and holds a Zacks Rank #3 (Hold).

Gilead Sciences Inc. (Nasdaq: GILD) has an Earnings ESP of +2.08% and carries a Zacks Rank #3.

Will Logitech Beat Earnings?

The computer and peripheral equipment company, Logitech International SA (Nasdaq: LOGI) is set to report its fourth-quarter fiscal 2013 results on April 24. In the last reported quarter, it posted an 81.82% positive surprise. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Logitech is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings Surprise Prediction or Zacks Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at 81.82%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks #3 Rank (Neutral): Stocks with Zacks Rank #1, Zacks Rank #2 and Zacks Rank #3 have a significantly higher chance of beating earnings. The sell rated stocks (Zacks Rank #4 and Zacks Rank #5) should never be considered going into an earnings announcement. 

The combination of a Zacks Rank # 3 (Hold) and 81.82% ESP makes us bullish on Logitech for the impending quarter.

What is Driving the Better than Expected Earnings?

Recently, Logitech launched a number of innovative products. The new tablet and gaming accessories are expected to benefit the company in the long run. Given the current trend towards smart phones and tablets, Logitech intends to tap this high potential market through its range of accessories. In the last reported quarter (3Q13), tablet accessories represented the best-performing retail product category, with sales increasing a robust 119.2% year over year to $39.4 million.

In addition, the company's cost-cutting initiatives are expected to benefit Logitech, saving approximately $12 million to $14 million in the fourth quarter of fiscal 2013. These savings will be primarily induced by employee retrenchments of 140 employees, or 5% of its workforce as part of its cost-cutting measure.

Moreover, the company is discontinuing with its non-profitable products and businesses. The company divested its remote control and digital video security categories with further plans to discontinue other non-profitable products, such as speaker docks and console gaming peripherals by the end of 2013.

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