The Zacks Analyst Blog Highlights: Google, Sandisk, Syntel, Scientific Games and Alnylam Pharmaceuticals

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Jul 18, 2013, 09:30 ET

CHICAGO, July 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 Google Inc. (Nasdaq:GOOG-Free Report), Sandisk Corp. (Nasdaq:SNDK-Free Report), Syntel Inc. (Nasdaq:SYNT-Free Report), Scientific Games Corp. (Nasdaq:SGMS-Free Report) and Alnylam Pharmaceuticals, Inc. (Nasdaq:ALNY-Free Report).

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Here are highlights from Wednesday's Analyst Blog:

Will Google Beat Earnings Estimates?

Google Inc. (Nasdaq:GOOG-Free Report) is set to report second quarter 2013 results on Jul 18. Last quarter, it posted a 13.25% positive surprise. Let's see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Google's gross revenue in the first quarter of 2013 was down sequentially but up from the year-ago year quarter. Additionally, Google's strong position in the mobile segment enabled it to generate strong mobile revenue growth. Google reported a gross margin of 57.9%, which was up sequentially due to a favorable mix.

The company's success in the tablet market, initiatives in the e-commerce segment (both retail and payment platforms), its Google Fibre initiative and its Nexus and Chromebook platforms are quite encouraging. We believe Google's growth strategies and solid execution will help the company to continue on the growth path.

Earnings Whispers

Our proven model does not conclusively show that Google will beat earnings this quarter. That is because a stock needs to have both a positive earnings expected surprise prediction or ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The Most Accurate estimate stands at $8.89 per share while the Zacks Consensus Estimate is higher at $9.04. That is a difference of -1.66%.

Zacks Rank #3 (Hold): Google's Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Sandisk Corp. (Nasdaq:SNDK-Free Report), with an ESP of +4.55% and a Zacks Rank #1 (Strong Buy)
Syntel Inc. (Nasdaq:SYNT-Free Report), with an ESP of +3.81% and a Zacks Rank #1 (Strong Buy)
Scientific Games Corp. (Nasdaq:SGMS-Free Report), with an ESP of +100.0% and a Zacks Rank #3 (Hold)

Alnylam: A Buying Opportunity

The stock price at Alnylam Pharmaceuticals, Inc. (Nasdaq:ALNY-Free Report) surged significantly last week following positive top-line data on its pipeline candidate ALN-TTRsc.

ALN-TTRsc is a ribo nucleic acid interference (RNAi) therapeutic targeting the transthyretin gene that is being developed for the treatment of TTR-mediated amyloidosis. The therapeutic is administered subcutaneously.

Results from the study revealed that ALN-TTRsc was successful in reducing serum TTR protein levels to more than 80% in healthy volunteers, who were enrolled in the study. The recent study results were at par with the previously reported ALN-TTRsc results in non-human primates.

Data from the study also revealed that ALN-TTRsc was generally safe and well tolerated. The randomized, double-blind, placebo-controlled, single- and multi-dose, dose-escalation study is still ongoing. Alnylam will assess the safety and tolerability of the candidate (single or multiple ascending subcutaneous doses) along with other parameters like assessment of clinical activity of the candidate as measured by serum TTR levels.

Alnylam plans to initiate a phase II study on ALN-TTRsc later this year depending on the successful completion of the phase I study. Positive results from the phase II study will lead to the initiation of a phase III study on the candidate in 2014.

ALN-TTR02 is another promising candidate in Alnylam's pipeline. Last month, Alnylam announced positive interim results from a phase II study on ALN-TTR02. ALN-TTR02 is another RNAi therapeutic targeting the transthyretin gene for treating TTR-mediated amyloidosis.

We are encouraged by the pipeline progress at Alnylam. We are positive on the biopharmaceutical company despite the Zacks Rank #3 (Hold) carried by it. We believe that the 8% dip in Alynam's price on the Nasdaq has made it more affordable for investors after the lofty prices it touched last week. Consequently, we view the current price as an attractive entry point for long-term investors.

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