The Zacks Analyst Blog Highlights:Gilead Sciences, Sanofi, Illumina, Myriad Genetics and D.R. Horton

May 14, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, May 14, 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 Gilead Sciences (Nasdaq: GILD-Free Report), Sanofi (NYSE: SNY-Free Report), Illumina (Nasdaq: ILMN-Free Report), Myriad Genetics (Nasdaq: MYGN-Free Report) andD.R. Horton Inc. (NYSE: DHI-Free Report).

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

Here are highlights from Tuesday's Analyst Blog:

Gilead Shows More Pipeline Progress

Gilead Sciences (Nasdaq: GILD-Free Report), which is basking in the glory of the exceptional performance of its newly approved hepatitis C virus (HCV) drug Sovaldi, announced encouraging results from a phase II study (HARMONY: n=134) on the combination of its chronic angina treatment Ranexa (ranolazine) and Sanofi's (NYSE: SNY-Free Report) heart drug Multaq (dronedarone: given in low dose) in patients suffering from atrial fibrillation (an abnormal heart beat or arrhythmia).

Data from the randomized, double-blind, placebo-controlled, 12-week study revealed that there was greater reduction in atrial fibrillation burden (AFB) from baseline in patients treated with the cocktail therapy compared to those treated with either drug as a monotherapy. The primary goal of the study was the change in AFB over 12 weeks. The time a patient was in atrial tachycardia/atrial fibrillation (percentage of total recording time continuously from 0 to 12 weeks) was defined as AFB in the study.

Following the encouraging results from the phase II study, Gilead intends to evaluate the above combination (fixed dose) in a phase III study. Successful development and subsequent commercialization of the cocktail therapy would augment Gilead's top line significantly, since the AF market has great unmet medical need.

Detailed data from the study was presented at the heart rhythm society's annual meeting. At the same forum, Gilead presented encouraging phase I data on its candidate GS-6615.

Data revealed that treatment with the candidate resulted in the shortening of the QTc interval (the time between the start of the Q-wave and end of the T-wave in the heart's electrical cycle) in patients suffering from long QT-3 (LQT3) syndrome, a cardiovascular disorder. Encouraged by the results, Gilead intends to evaluate the candidate in a phase II study in the above indication later in the year.

Though impressed by the pipeline developments at Gilead, we believe investor focus will remain on the performance of Sovaldi going forward. The drug performed brilliantly (sales of $2.27 billion) in its first full quarter in the market. We expect Sovaldi sales to continue growing throughout 2014.

The blockbuster product should see strong demand until an improved treatment enters the market. The product's outstanding performance in the first quarter of 2014 should go a long way in justifying its high price tag. The drug costs $84,000 for a 12-week treatment period in the U.S. We remind investors that Sovaldi's high price had invited criticisms from various quarters.  

Gilead carries a Zacks Rank #1 (Strong Buy). Illumina (Nasdaq: ILMN-Free Report) and Myriad Genetics (Nasdaq: MYGN-Free Report) carry the same rank as Gilead in the healthcare sector.

Is D.R. Horton (DHI) Well Poised for 2014?

Zacks Investment Research has issued an updated research report on D.R. Horton Inc. (NYSE: DHI-Free Report).

After a strong first quarter, the leading national homebuilder reported better-than-expected second quarter of fiscal 2014 results on Apr 24. The company surpassed the Zacks Consensus Estimate for both revenues and earnings. Earnings improved 19% year over year, driven by homebuilding revenue growth of 22% and strong gross margins. Order trends improved both year over year and sequentially.

D.R. Horton offers a diversified line of homes across various price points through its multi-brand platform. Moreover, the company enjoys one the broadest geographic diversity in the industry and is not dependent on any one market. Further, the company's land and lot position is currently the strongest in its 35-year history. In fact, the company is well positioned to meet demand in fiscal 2014 and 2015.

However, supply shortages and rising costs of building materials, labor and land raises serious concerns about stability in the housing market.

A shortage of buildable lots and skilled labor and a lack of available capital for smaller builders are limiting the production of homes, thereby lowering inventory of homes, both new and existing. As a result, neither current nor pent-up demand can be met. If the supply picture does not improve, home prices could shoot up further, causing many homebuyers to hold back on their purchase decisions.

Moreover, as housing starts accelerate, both labor and construction material costs continue to experience an upward pricing pressure. This could prove to be a major deterrent for the company's margins in the future quarters. Further, interest rates have started increasing since May 2013, thus slowing down the housing recovery in the second half of 2013. High interest rates dilute the demand for new homes, as mortgage loans become expensive lowering a buyer's purchasing power, in turn affecting volumes, revenues and profits of homebuilders.

However, despite these concerns, management is confident of increasing revenues and profitability in the second half of the year on the back of broad geographic and product diversity, solid balance sheet and robust land position.

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

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