The Zacks Analyst Blog Highlights: CNOOC, Nexen, Sanofi, Taro Pharmaceutical and Pernix Therapeutics

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Aug 23, 2012, 09:30 ET

CHICAGO, Aug. 23, 2012 /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 CNOOC Limited (NYSE:CEO), Nexen Inc. (NYSE:NXY), Sanofi (NYSE:SNY), Taro Pharmaceutical (NYSE:TARO) and Pernix Therapeutics (AMEX:PTX).

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Here are highlights from Wednesday's Analyst Blog:

CNOOC's Twin Oil Discoveries

China's dominant producer of offshore crude oil and natural gas, CNOOC Limited (NYSE:CEO) has made two exploration discoveries − Luda 6-2 and Lufeng 15-1 − in two different plays in China.

Located in the Liaodong Bay in Bohai, Luda 6-2, reaches an average water depth of about 31 meters. The drilling wells - Luda 6-2-4 and Luda 6-2-5 - came across 40 and 147.6 meter thick oil pay zones, respectively. The tests ascertained an average yield of 850 barrels per day.

Additionally, Lufeng 15-1 is situated in the Pearl River Mouth Basin and reaches an average water depth of 283 meters. The exploration well Lufeng 15-1-2 hit upon a 26.8 meter thick oil pay zone. The trial ascertained an average yield of 800 barrels per day.

CNOOC's new discovery in the Lufeng 15-1 structure has prompted intensive oil and gas exploratory operation in the area. It has also enabled further growth of independent activities by other companies in the Pearl River Mouth Basin.

CNOOC has made significant exploration developments during the first half of 2012, mainly through a mid to large sized new oil discovery and successful appraisal of a large oilfield in Bohai. CNOOC also expects 4 new projects to come online in offshore China in 2012. Based on the company's rich resource base, CNOOC has created a solid foundation for future growth.

Management remains optimistic on the company's performance, which is reflected through its premium assets portfolio, excellent execution strategy, unique position as a pure oil play and potential transactions in the merger and acquisition space.

Recently, CNOOC cut a deal to purchase Canadian energy producer Nexen Inc. (NYSE:NXY) for approximately $15.1 billion in cash. The deal signifies the country's biggest foreign takeover so far.

We maintain our long-term Neutral rating on CNOOC ADRs. The company currently holds a Zacks #3 Rank, equivalent to a short-term Hold rating.

Sanofi Launches Sklice in the US

Sanofi's (NYSE:SNY) vaccines division, Sanofi Pasteur, recently announced the launch of Sklice (ivermectin) Lotion, 0.5% in the US.

The Food and Drug Administration (FDA) had approved the product for the topical treatment of head lice in patients aged 6 months and above in February 2012. Sklice was added to Sanofi's portfolio after the acquisition of Topaz Pharmaceuticals in October 2011.

Approval was granted on the basis of data from two identical multi-center, double-blind and placebo-controlled phase III trials evaluating the efficacy and safety of Sklice. The two phase III studies enrolled 781 patients in total.

Sklice demonstrated an impressive efficacy profile with a significantly higher number of patients in the Sklice arm being louse-free as compared to the placebo arm. Sklice was also found to be well tolerated and less than 1% of patients experienced side effects like conjunctivitis, ocular hyperemia, eye irritation, dandruff, dry skin and skin-burning sensation.

As per Centers for Disease Control and Prevention (CDC) data, head lice infests approximately 6 to 12 million children between 3 to 11 years annually. The total cost of the disease (both direct and indirect) is anticipated to be around $1 billion. Currently available head lice topical treatments include Taro Pharmaceuticals' (NYSE:TARO) Ovide (malathion) and Pernix Therapeutics (AMEX:PTX) and ParaPRO's Natroba (spinosad).

Our Recommendation

We expect Sanofi to contain operating costs in order to increase earnings in the face of weakening sales of some key drugs. We also expect the company to pursue bolt on acquisitions. We are pleased with the company's efforts to develop its pipeline.

We currently have a Neutral recommendation on Sanofi. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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