The Zacks Analyst Blog Highlights: JPMorgan Chase, Bank of America, Eli Lilly, Bristol-Myers Squibb and Biogen Idec

Aug 16, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Aug. 16, 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 JPMorgan Chase & Co. (NYSE: JPM-Free Report), Bank of America Corporation (NYSE: BAC-Free Report), Eli Lilly and Company (NYSE: LLY-Free Report), Bristol-Myers Squibb (NYSE: BMY-Free Report) and Biogen Idec (Nasdaq:BIIB-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

JPMorgan-Syncora Lawsuit Dismissed

In a relief to JPMorgan Chase & Co. (NYSE: JPM-Free Report), Bloomberg reported that the lawsuit filed by Syncora Guarantee Inc. has been dismissed. The lawsuit was filed in the New York state Supreme Court in Manhattan.

When filing the case in 2011, Syncora had accused JPMorgan of providing misleading information prior to signing the agreement concerning insuring interest and principal repayments related to the $666 million bond (GreenPoint Mortgage Funding Trust 2007-HE1) created in 2007, which was supported by 9,871 equity home loans. As a result, Syncora had to shell out more than $168.6 million in settling claims of the aggrieved parties.

In 2012, JPMorgan tried to dismiss the case by stating that Syncora had already filed litigation claims in the U.S. District Court. However, in May 2012, Justice Charles Ramos ruled out the company's plea. Now, an appeals court in Manhattan has dismissed the case by reversing Justice Charles Ramos's ruling.

In Jul 2012, Bank of America Corporation (NYSE: BAC-Free Report) agreed to pay $375 million to settle a lawsuit filed by Syncora over risky mortgage backed securities (MBS). In 2009, Syncora had filed a case against BofA that bore similar charges as those leveled against JPMorgan.

Though the dismissal of the lawsuit is a relief for JPMorgan, the company still faces several lawsuits pertaining to the sale of risky MBS preceding the financial crisis. Additionally, in its latest quarterly filings, the company disclosed that the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are investigating violation of several federal security laws during the sale of risky residential mortgage backed securities (RMBS) during 2005–2007.

Given this and several other cases, at the end of second-quarter 2013, JPMorgan increased its anticipated legal losses (exceeding its existing litigation reserves) to $6.8 billion from $6.0 billion in the prior quarter.

Currently, JPMorgan carries a Zacks Rank #3 (Hold).

Eli Lilly Scores with Necitumumab

Eli Lilly and Company (NYSE: LLY-Free Report) received a boost recently with its phase III oncology candidate, necitumumab, achieving the primary endpoint in a study (SQUIRE) conducted in patients with stage IV metastatic squamous non-small cell lung cancer (NSCLC). Shares were up 2.6% on the news.

Results showed that patients receiving first-line treatment with necitumumab plus Gemzar and cisplatin achieved higher overall survival (OS) compared to patients on chemotherapy.  Common adverse events included rash and hypomagnesemia. Serious adverse events included thromboembolism (blood clots).

Eli Lilly intends to present these results at a medical meeting next year and is looking to file for regulatory approval by the end of 2014. The company has full global development and commercialization rights to necitumumab. Earlier, Eli Lilly had a collaboration with Bristol-Myers Squibb (NYSE: BMY-Free Report) for necitumumab in North America and Japan - however, Bristol-Myers terminated the collaboration in late 2012.

Our Take

The approval of necitumumab would be a major positive for Eli Lilly – in its press release, Eli Lilly mentioned that non-small cell lung cancer accounts for 85% of all lung cancer cases. About 30% of these patients suffer from squamous cell cancer.

However, we remain concerned about the occurrence of thromboembolism in the study. We remind investors that in early 2011, enrolment in another phase III study on necitumumab was stopped due to safety concerns related to thromboembolism in new or recently enrolled patients.

Eli Lilly currently carries a Zacks Rank #3 (Hold). The biggest near-term challenge for Eli Lilly will be to replace the revenues lost due to the Zyprexa genericization. The generic threat will continue to pose challenges for Eli Lilly with Cymbalta slated to lose patent protection in late 2013 and Evista in 2014. On the other hand, the Animal Health business and the diabetes franchise should provide some downside support.

Currently, biotech stock Biogen Idec (Nasdaq:BIIB-Free Report) looks well-positioned. It is Zacks Rank #1 (Strong Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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