The Zacks Analyst Blog Highlights:Pandora Media, Apple, Sirius XM, Bristol-Myers Squibb and Five Prime Therapeutics
CHICAGO, April 24, 2014 /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 the Pandora Media, Inc. (NYSE:P-Free Report), Apple (Nasdaq:AAPL-Free Report), Sirius XM (Nasdaq:SIRI-Free Report), Bristol-Myers Squibb Company (NYSE:BMY-Free Report) and Five Prime Therapeutics, Inc. (Nasdaq:FPRX-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
Is Pandora Poised to Beat Earnings Estimates?
We expect Pandora Media, Inc. (NYSE:P-Free Report) to beat expectations when it reports first quarter 2014 results on Apr 24.
Let us see how things are shaping up for this quarter.
A Likely Positive Surprise
Our proven model shows that Pandora is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise Prediction, or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +5.26%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #2 (Buy): Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement.
The combination of Pandora's Zacks Rank #2 and +5.26% ESP makes us very confident of an earnings beat on Apr 24.
What Will Drive the Better-than Expected Earnings?
Pandora's growing user base is a major positive. Per the latest audio metrics, Pandora's listener hours for Mar 2014 were up 14.0% on a year-over-year basis. Also, the share of total U.S. radio listening went up to 9.1% from 8.1% reported in the year-ago month. Additionally, the number of active listeners went up 8.4% on a year-over-year basis.
Improving monetization and strong mobile growth will drive the top line. However, rising costs related to licensing will remain a headwind in the near term. Moreover, higher operating expenses are expected to hurt profitability in the near term.
Nevertheless, we believe that Pandora's popular service, driven by its effective discovery engine and a well-established infrastructure, places it well to compete against the likes of Apple (Nasdaq:AAPL-Free Report), Spotify and Sirius XM (Nasdaq:SIRI-Free Report).
Bristol-Myers, Samsung BioLogics Extend Ties
Bristol-Myers Squibb Company (NYSE:BMY-Free Report) expanded its existing manufacturing agreement with Samsung BioLogics. As per the new deal, Samsung will be manufacturing several biologic medicines for Bristol-Myers at its manufacturing site in Incheon, South Korea. The companies did not reveal any financial details of the deal.
In July last year, Bristol-Myers and Samsung had entered into a 10-year agreement. As per the initial deal, Samsung had to manufacture a single oncology product for Bristol-Myers. The deal aimed at strengthening Bristol-Myers' oncology pipeline.
Bristol-Myers has inked a number of partnerships over the last few months. Last month, Bristol-Myers entered into a deal with Five Prime Therapeutics, Inc. (Nasdaq:FPRX-Free Report) for the discovery, development and commercialization of immuno-oncology treatments. Under the terms of the deal, Bristol-Myers will have a 4.9% stake in Five Prime shares through an investment of $21 million.
The deal grants Bristol-Myers access to Five Prime's immuno-oncology platform. Bristol-Myers is also responsible for identifying the most promising candidates which will be developed either as monotherapies or in combination with Bristol-Myers' existing immuno-oncology treatments based on two undisclosed immune checkpoint pathways. Furthermore, the deal grants Bristol-Myers full worldwide rights to market these therapies on approval.
Our Take
We are encouraged by Bristol-Myers' collaboration efforts with other companies to advance its pipeline. Bristol-Myers has been trying to offset the declining sales of some of its important products by bringing in new products through in-licensing deals.
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