The Zacks Analyst Blog Highlights: Western Union, Mylan, Valeant Pharmaceuticals, Sanofi and Pfizer

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Feb 09, 2012, 09:30 ET

CHICAGO, Feb. 9, 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 Western Union Co. (NYSE: WU), Mylan, Inc. (Nasdaq: MYL), Valeant Pharmaceuticals (NYSE: VRX), Sanofi (NYSE: SNY) and Pfizer, Inc. (NYSE: PFE).

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Here are highlights from Wednesday's Analyst Blog:

Western Union In Line, Ups Dividend

World's leading money transfer company, Western Union Co. (NYSE: WU) reported fourth quarter operating earnings of 40 cents per share, in line with the Zacks Consensus Estimate. Earnings per share, however, were up 5.3% year over year on the back of a strong margin improvement in its Global Business Payments unit and a lower share count.

Western Union's revenues for the quarter were $1.4 billion, up 5% year over year, and in line with the Zacks Consensus Estimate. The year-over-year increase came on the back of 20% hike in foreign exchange revenues and 2% increase in transaction fee, and was partly offset by 10% decline in other revenues.

Full year 2011 total revenues came in at $5.5 billion, up 6% year over year, and led by higher transaction, foreign exchange and other revenues. Earnings per share also increased 11% year over year to $1.57.

Total expenses for the quarter increased 4% year over year to $1.1 billion due to a 12% hike in selling, general and administrative expense and 1% increase in cost of services.

Key Events in 4Q

Completion of acquisition of TGBP, a leading specialist provider of international business payments, which would enhance Western Union's position in small and medium enterprise ("SME") business-to-business cross border payments. The company views this area as one offering key strategic growth.
Completion of acquisition of Finint S.r.l., one of Western Union's leading money transfer network agents in Europe.
Western Union also signed a global prepaid and money transfer agreement with MasterCard, which will help it to globalize prepaid services and allow it to leverage MasterCard's world-class global electronic network.
Launched prepaid cards in Europe.

Dividend Hike

With a robust performance all through the year 2011, the company decided to reward its shareholders with a greater dividend payout. Consequently, the company declared a 25% increase in quarterly dividend to 10 cents per share. The dividend will be paid on March 30, 2012 to shareholders of record as of March 16, 2012.

Our Take

We are very impressed with Western Union's solid performance throughout 2011. The company surpassed its earnings outlook from the beginning of the year and delivered highest full-year revenue growth rate since 2008.

For the year 2012, Western Union is intent on developing three main areas. These include expanding the existing network and increasing focus on retaining and adding new customers to the consumer money transfer business; creating a digital infrastructure to drive its electronic channels business and developing the B2B segment apart from ensuring successful integration of the Travelex business.

Given the pace at which the company is aggressively making acquisitions, expanding its agent network and rolling out new products and services, we expect the company to evolve from a transaction-based to a truly customer-centric organization within a short span thus offering added convenience and more choice to its consumers.

Western Union currently retains a Zacks #1 Rank, which translates into a short-term 'Buy' rating. However, based on its strong fundamentals, we are maintaining our long-term "Outperform" recommendation on the shares.

Mylan Acquires 2 Generics

Mylan, Inc. (Nasdaq: MYL), one of the leading generic drug makers in the world, recently announced the acquisition of two generic dermatological products from Canadian company Valeant Pharmaceuticals (NYSE: VRX). Mylan acquired the authorized generic version of Valeant Pharma's Efudex cream indicated for the treatment of multiple actinic or solar keratoses.

Second, Mylan has acquired the abbreviated new drug application (ANDA) for the generic version of Valeant Pharma's topical acne treatment BenzaClin. Mylan had originally manufactured and marketed the generic version of BenzaClin through an agreement with Valeant.

Terms of the deal have been kept confidential. Valeant Pharma was required to divest these generic products as per the terms of its deal to acquire Dermik, the dermatology unit of Sanofi (NYSE: SNY), which was completed in December of last year.

Recently, Mylan also received tentative approval to market its generic version of Pfizer, Inc.'s (NYSE: PFE) blockbuster cholesterol drug Lipitor which lost exclusivity in late November 2011.

Our Recommendation

We currently have an Outperform long-term recommendation on Mylan. The shares carry a Zacks #3 Rank (short-term Hold rating).

Mylan is one of the leading players in the US generics market. The company holds immense potential as many blockbuster drugs have begun to go off-patent and many more will lose patent exclusivity in the next few years.

Moreover, we are encouraged by Mylan's geographic reach and product depth along with a robust generic product pipeline. We believe the generic segment will post strong sales in 2012 benefiting from a slew of product launches already lined up.

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