The Zacks Analyst Blog Highlights:Actavis, Sanofi, Takeda Pharmaceutical, Forest Laboratories and Iconix Brand Group

Mar 04, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, March 4, 2014 /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 the Actavis, Inc. (NYSE: ACT-Free Report), Sanofi (NYSE: SNY-Free Report), Takeda Pharmaceutical Company Limited (OTC:TKPYY-Free Report), Forest Laboratories Inc. (NYSE: FRX-Free Report) and Iconix Brand Group Inc. (Nasdaq: ICON-Free Report).

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

Here are highlights from Monday's Analyst Blog:

Actavis Challenges Patents

Actavis, Inc. (NYSE: ACT-Free Report) announced that it is seeking U.S. Food and Drug Administration (FDA) approval for its generic versions of Sanofi's (NYSE: SNY-Free Report) Multaq and Takeda Pharmaceutical Company Limited's (OTC:TKPYY-Free Report) Colcrys. While Multaq is an antiarrhythmic drug for reducing the risk of hospitalization for atrial fibrillation (AF) in patients in sinus rhythm with a history of paroxysmal or persistent AF, Colcrys is used for the prevention and treatment of gout flares.

Both Sanofi and Takeda have filed patent infringement lawsuits against Actavis for their respective drugs. The filing of the lawsuits within the stipulated time period under the Hatch-Waxman Act ensures that the FDA cannot grant final approval to Actavis' generics versions for up to 30 months (until Jan 1, 2017 in Multaq's case) or the court's decision, whichever is earlier.

According to IMS Health, total U.S. sales of Multaq during the 12 months ended Dec 31, 2013, were $319 million. Meanwhile, Colcrys sales in the U.S. during the same time period were about $629 million, according to IMS Health. Actavis believes that it was first-to-file an abbreviated new drug application (ANDA) for a generic version of Multaq – if that is the case, Actavis would be entitled to 180 days of exclusivity on gaining FDA approval for its candidate.

Our Take

We are pleased with the progress of Actavis' generic pipeline. While Actavis continues to work on driving generic product sales, the company is also working on strengthening its branded product portfolio. Last month, Actavis announced its intention to acquire Forest Laboratories Inc. (NYSE: FRX-Free Report). The acquisition will lead to the creation of a specialty company with sales of more than $15 billion per year, a well-diversified portfolio and a presence in varied geographical areas. The Forest Labs acquisition will push up Actavis' branded products revenues to 50% of total combined revenues from the current level of 30% of the standalone company's revenues. The Forest Labs acquisition will also bring about significant synergies and boost earnings and revenues.

Actavis and Forest Labs both carry a Zacks Rank #2 (Buy).

Iconix Upped to Strong Buy

Zacks Investment Research upgraded Iconix Brand Group Inc. (Nasdaq: ICON-Free Report) to a Zacks Rank #1 (Strong Buy) on Feb 27, following its strong fourth quarter and full-year 2013 results.

Why the Upgrade?

On Feb 21, this clothing brand licensing company posted fourth quarter 2013 adjusted earnings of 54 cents per share, ahead of the Zacks Consensus Estimate of 51 cents and up 32% from the year-ago earnings of 41 cents. The upswing can be attributed to solid revenues, strategic acquisitions and lower share count owing to share buyback.

Iconix's revenue of $105.3 million was in line with the Zacks Consensus Estimate and surged 24% year over year, driven by the company's recent acquisitions (Umbro, Buffalo and Lee Cooper), strong performance of core brands and increased contribution from international joint ventures.

In 2013, the company formed four new international joint ventures in Canada, Australia, Southeast Asia and Israel. With these joint ventures and acquisition of global brands, the company's international business formed 37% of the company's total business, up from 24% in 2012.

During the fourth quarter, the board of Iconix authorized a new share repurchase program of $500 million for three years. The company currently has approximately $110 million remaining under the previous $300 million stock repurchase program approved in Jul 2013.

For 2014, Iconix continues to expect revenues in the range of $440 million-$455 million. Adjusted earnings are expected in the range of $2.50-2.60 per share for 2014. Free cash flow is expected in the range of $210-$217 million.

Iconix's overall growth story looks compelling. The company has been aggressively acquiring brands and entering into joint ventures to expand its portfolio. Going forward, the company expects international expansion to boost organic growth for its brands.

The company witnessed sharp upward estimate revisions after the announcement of its fourth quarter 2013 results. Estimates for 2014 increased 1.2% over the past 30 days.

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

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