Zacks Bull and Bear of the Day Highlights: Fortune Brands Home & Security, Wal-Mart Stores, Regeneron Pharmaceuticals, Bayer and Array Biopharma

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Feb 20, 2013, 09:30 ET

CHICAGO, Feb. 20, 2013 /PRNewswire/ -- Zacks Equity Research highlights Fortune Brands Home & Security (NYSE:FBHS) as the Bull of the Day and Wal-Mart Stores (NYSE:WMT) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Regeneron Pharmaceuticals (Nasdaq:REGN), Bayer (OTC:BAYRY) and Array Biopharma (Nasdaq:ARRY).

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Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.

Here is a synopsis of all five stocks:

Bull of the Day:

Fortune Brands Home & Security (NYSE:FBHS) has been waiting 5 years for the turnaround in the U.S. housing and construction market. It's finally here. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits in 2013 and 2014.

Fortune Brands Home & Security was created in Oct 2011 when it was spun off from Fortune Brands. You probably know some of its brands. It makes products such as MasterBrand cabinets, Moen faucets, Simonton windows and Therma-True door systems. In the security area, it also sells the Master Lock brand.

On Jan 31, Fortune Brands Home & Security reported its fourth quarter results and beat the Zacks Consensus by a penny. Sales rose 8% and were led by the two big housing segments Kitchen & Bath Cabinetry and Plumbing.

Kitchen & Bath Cabinetry saw sales rise 12% year over year on overall market improvement. Plumbing jumped 15% on increases in all channels including strong gains in U.S. wholesale from new construction and international markets, especially China.

Bear of the Day:

All is not well at the nation's largest retailer. Wal-Mart Stores (NYSE:WMT) has been in the news in the last week but not for a good reason. Just days ahead of its fourth quarter earnings results on Sep 21, e-mails from top management leaked to Bloomberg indicating a bust in February sales.

"In case you haven't seen a sales report these days, February MTD sales are a total disaster," Jerry Murray, Wal- Mart's vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. "The worst start to a month I have seen in my ~7 years with the company."

Of course, this could be just one e-mail which was taken out of context.

But many analysts are blaming the expiration of the payroll tax cut at the end of January and for a delay in tax refunds for the alleged lackluster February sales. The 2% increase in the payroll tax is equivalent to about $20 in take home pay a week for the worker making $50,000 a year. This is Wal-Mart's targeted customer base.

The analysts were already sour on Wal-Mart even before these latest e-mails leaked. For the fiscal fourth quarter 2 estimates had been lowered in the last 60 days. 2 estimates have also been cut on the coming year, fiscal 2014, which includes the February sales referred to in the e-mails. Wal-Mart has fallen to a Zacks Rank #4 (Sell).

Latest Posts on the Zacks Analyst Blog:

Pipeline Progress at Bayer/Regeneron

Regeneron Pharmaceuticals (Nasdaq:REGN) and partner, Bayer's (OTC:BAYRY) HealthCare unit recently commenced a new phase III study (VIVID EAST-DME) to evaluate the efficacy and safety of their eye drug Eylea for treating patients suffering from diabetic macular edema (DME). The companies have initiated the study in Russia , China and other Asian countries.

The primary endpoint of the phase III study, which has three treatment arms, is the mean change in visual acuity from baseline to week 52. This will be measured by the early treatment diabetic retinopathy study eye chart. Bayer/Regeneron intend to evaluate the patients in the study for a maximum period of one year.

We note that while Bayer is conducting the first phase III study (VIVID-DME) of Eylea in the DME indication in Europe and Japan , Regeneron is evaluating the drug in the same indication in another phase III study (VISTA-DME) in the US . Enrollment has been completed in both the studies.

As per the agreement between the companies on Eylea, Bayer is responsible for marketing the drug in ex-US markets on approval. The profit earned from the sales of the drug in those markets will be shared equally by the companies. In Japan , Regeneron is eligible to receive royalties on net sales of the drug. However, Regeneron owns the entire US rights pertaining to the eye drug.

Eylea is also being studied for other indications, such as macular edema following branch retinal vein occlusion and myopic choroidal neovascularization.

We note that Eylea is already available in the US since Nov 2011 for treating patients suffering from the neovascular form of age-related macular degeneration. The drug was cleared in the EU for the same indication late last year. In Sep 2012, the label of the drug was successfully expanded in the US to treat patients suffering from macular edema following central retinal vein occlusion (CRVO).

Regeneron, a biopharmaceutical company, also carries a Zacks Rank #3. Biopharma stocks, which are currently well-placed include Array Biopharma (Nasdaq:ARRY), which carries a Zacks Rank #2. Bayer also carries a Zacks Rank #2.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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