The Zacks Analyst Blog Highlights:GlaxoSmithKline, Biogen, Santarus, Novo Nordisk and Tetra Tech

Jun 20, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, June 20, 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 GlaxoSmithKline (NYSE: GSK-Free Report), Biogen Idec (Nasdaq: BIIB-Free Report), Santarus, Inc. (Nasdaq: SNTS-Free Report), Novo Nordisk (NYSE: NVO-Free Report) and Tetra Tech, Inc. (Nasdaq: TTEK-Free Report).


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Here are highlights from Wednesday's Analyst Blog:

Glaxo Gets Offer for Thrombosis Drugs

GlaxoSmithKline (NYSE: GSK-Free Report) recently announced that Aspen Global Inc., a subsidiary of Aspen Pharmacare Holdings Limited, has offered to buy Glaxo's thrombosis brands. Aspen Pharma has also offered to purchase the related manufacturing site in France, Notre-Dame de Bondeville. The financial terms of the deal were not disclosed.

Glaxo's thrombosis brands include Arixtra and Fraxiparine. In the first quarter of 2013, Arixtra and Fraxiparine generated sales of £49 million (up 2% from the year-ago quarter) and £52 million (down 16% from the year-ago quarter), respectively. The proposed deal does not include right to the drugs in China, India and Pakistan.  

Glaxo and Aspen Pharma are no strangers to each other. Glaxo holds approximately 18.6% of Aspen Pharma's shares (as per Aspen Pharma's 2012 annual report). Both the companies had entered into a number of deals in the past.

Last year, Glaxo divested the majority of its Classic Brands in Australia and non-core over-the-counter (OTC) brands sold in international markets to Aspen Pharma.

We note that Glaxo's product portfolio was boosted recently with the approvals of two melanoma drugs, Tafinlar (dabrafenib) and Mekinist (trametinib) and chronic obstructive pulmonary disease drug, Breo Ellipta. Moreover, Glaxo boasts of a robust pipeline. A number of pipeline-related news is expected in the coming quarters. We believe that the pipeline at Glaxo must deliver to combat the generic threat faced by the key drugs of the company.

Glaxo carries a Zacks Rank #3 (Hold). Companies that currently look well-positioned include Biogen Idec (Nasdaq: BIIB-Free Report), Santarus, Inc. (Nasdaq: SNTS-Free Report) and Novo Nordisk (NYSE: NVO-Free Report). While Biogen and Santarus are Zacks Rank #1 (Strong Buy) stock, Novo Nordisk is a Zacks Rank #2 (Buy) stock.

Tetra Tech Projects Loss in Q3

Tetra Tech, Inc. (Nasdaq: TTEK-Free Report) recently revised its third quarter 2013 guidance to factor in the impacts of increased restructuring costs from weakness in Eastern Canada and mining. Costs have also increased owing to new findings on certain project claims. During the second quarter earnings call on May 2, 2013, Tetra Tech had mentioned about prevailing weakness in Eastern Canada and mining to adversely impact its business in the upcoming quarters.

Tetra Tech projects these charges to affect the revenue and earnings of all three operating segments. The company now expects revenue for the third quarter (net of subcontractor costs) in the range of $440 million to $490 million. The company expects to incur a loss in the quarter ranging between 30 cents and 50 cents a share, primarily due to the one-time charges that it expects to incur. 

Apart from this, the board of directors authorized a $100 million common stock repurchase program.

Third-quarter restructuring costs are now expected to be $50 million, of which $40 million are non-recurring in nature. The increase in restructuring costs is primarily attributable to downsizing of operations as weak economic conditions hamper project demand. Approximately two-thirds of the costs are related to Eastern Canada operations, while about one-third is related to its mining operations. Depending on these expected costs, Tetra Tech will calculate its goodwill impairment charge and will inform investors during the third quarter earnings release.       

Tetra Tech's restructuring initiatives are promising as they are in line with the changes in the market. Right-sizing its operations may help the company to return to its historical profit levels and improve margins.

In addition, Tetra Tech received unfavorable findings primarily associated with claims on four programs during the quarter. Tetra Tech will thus record a charge while continuing with the dispute resolution processes. These claims are related to change orders for certain U.S. federal and state government projects that are facing budget constraints. These charges are expected to total around $45 million.  

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