The Zacks Analyst Blog Highlights:United Parcel Services, AstraZeneca, Sanofi, Array BioPharma and Roche

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Oct 24, 2013, 09:30 ET

CHICAGO, Oct. 24, 2013 /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 United Parcel Services Inc. (NYSE:UPS-Free Report), AstraZeneca (NYSE:AZN-Free Report), Sanofi (NYSE:SNY-Free Report), Array BioPharma (Nasdaq:ARRY-Free Report) and Roche (OTC:RHHBY-Free Report).

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

Here are highlights from Wednesday's Analyst Blog:

Will UPS Disappoint This Earnings Season?

United Parcel Services Inc. (NYSE:UPS-Free Report), the world's largest express carrier and package delivery company, is set to release its third quarter 2013 results before the opening bell on Oct 25, 2013.

In the last quarter, the company managed to meet its earnings estimate. Let's see how things are shaping up for this announcement.

Factors to Consider This Past Quarter

The company has taken various strategic measures such as collaborations with other leading firms, a well-defined business model, constant technology upgrades and freight rate hikes to maintain its industry leading position. Additionally, the company was engaged in the expansion of distribution facilities dedicated to health care in the key markets of North and South America to tap the opportunities in the health care business.

However, we remain concerned about a sluggish European market and the heavy expansion plans that the company is undertaking internationally. Economic instability in Asia has further aggravated the risk of the company as a significant portion of its revenue come from international markets. Further, UPS operates in a competitive environment which only gets worse with industry consolidation.

Earnings Whispers

Our proven model does not conclusively show that UPS is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at $1.15 while the Zacks Consensus Estimate is higher at $1.16. This leads to an ESP of -0.86% for UPS.

Zacks Rank: UPS' Zacks Rank #3 (Hold), however, increases the predictive power of ESP. Nevertheless, we also need to have a positive ESP to be confident of an earnings surprise call.

We caution investors against the stock going into the earnings announcement, as a Zacks earnings ESP of -0.86% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.

AstraZeneca Advances Oncology Candidate

AstraZeneca (NYSE:AZN-Free Report) has initiated a phase III program for its oncology candidate, selumetinib. The company is looking to get selumetinib approved as second-line treatment in patients, who suffer from advanced or metastatic non-small-cell lung cancer (NSCLC) with KRAS mutation-positive tumors.

The SELECT-1 (SELumetinib Evaluation as Combination Therapy-1) study aims to enroll 634 NSCLC patients to compare the safety and efficacy of selumetinib in combination with Sanofi's (NYSE:SNY-Free Report) Taxotere (docetaxel) to Taxotere and placebo. Results will be measured on the basis of progression free survival (PFS) and overall survival.

AstraZeneca advanced selumetinib into phase III studies on the basis of encouraging data from a randomized phase II study, Study 16, evaluating selumetinib plus Taxotere versus Taxotere alone in KRAS-mutation positive NSCLC. Statistically significant PFS was observed in the selumetinib plus Taxotere arm (5.3 months) as compared to Taxotere alone (2.1 months).

We remind investors that in 2003, AstraZeneca acquired exclusive worldwide rights to selumetinib fromArray BioPharma (Nasdaq:ARRY-Free Report).

Generic competition has been adversely impacting AstraZeneca's revenues over the past few quarters. This has put significant pressure on the company.

In a bid to add late-stage candidates to its pipeline, AstraZeneca entered into a number of acquisition deals (Pearl Therapeutics and Omthera Pharmaceuticals) in the last few months and agreements with companies such as FibroGen, Inc.

AstraZeneca, a large-cap pharma company, presently carries a Zacks Rank #3 (Hold). Other large-cap pharma stocks such as Roche (OTC:RHHBY-Free Report) looks well positioned with a Zacks Rank #1 (Strong Buy).

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