Zacks Bull and Bear of the Day Highlights: Santarus, Nuance Communications, Sprint Nextel, DISH Network and Verizon Communications
CHICAGO, May 22, 2013 /PRNewswire/ -- Zacks Equity Research highlights Santarus Inc (Nasdaq:SNTS) as the Bull of the Day and Nuance Communications (Nasdaq:NUAN) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sprint Nextel Corp. (NYSE:S), DISH Network (Nasdaq:DISH) and Verizon Communications (NYSE:VZ).
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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:
After a big earnings beat two weeks ago, biotech company Santarus Inc (Nasdaq:SNTS) became a Zacks #1 Rank Strong Buy on May 7. Since then, shares have climbed over 5%.
Santarus is a specialty pharmaceutical company focused on acquiring, developing and commercializing proprietary products for the prevention and treatment of gastrointestinal diseases and disorders. Founded in 1996, they are based in San Diego, CA.
The company markets CYCLOSET tablets, and is working to commercialize GLUMETZA, drugs designed as adjuncts to diet and exercise to improve glycemic control in adults with type 2 diabetes. They've even got a drug for the treatment of travelers' diarrhea.
On May 6, Santarus reported 1Q2013 EPS of $0.25 when the Street was looking for only 12 cents. The big surprise was primarily due to higher Zegerid (gastric reflux) and Uceris (ulcerative colitis) sales of $24.6M and $6.6M, respectively, vs lower analyst estimates, especially for the newer drug Uceris.
Nuance Communications (Nasdaq:NUAN) has consistently been a Zacks #4 Rank (Sell) or #5 Rank (Strong Sell) since disappointing the Street in February with its first quarter (fiscal year 2013) results.
And its 2QFY13 results, unexpectedly reported on April 30, didn't help their cause any. The company was unable to offer any clearer guidance about the state of their turnaround.
And while many investors stepped aside from the muddy December quarter and were rewarded for doing so in the March one (check out my price chart below), one giant among them accumulated a 10% stake.
I am speaking, of course, of Carl Icahn who reported in an SEC filing on April 30 he was the holder of nearly 34 million shares. Clearly, he sees something that the analysts don't as earnings estimates continue to head down.
But Carl isn't completely alone in seeing a silver lining here. One Wall Street house, Wedbush Securities, recently initiated coverage of Nuance with an Outperform rating and a $23 price target.
"While the company clearly has issues to resolve (sales execution, better managing the shift to recurring revenue sources), we view the risk/reward as favorable at current levels."
To join this optimistic view, you have to believe that company (or Carl) can turn things around. Not knowing what or how long that will take, I think we can safely wait to see if those earnings estimates turn around first.
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SoftBank Softens Sprint Deal Terms
Japanese cellphone company SoftBank Corp. has finally loosened its proposed terms with Sprint Nextel Corp. (NYSE:S), providing the latter a scope to consider DISH Network's (Nasdaq:DISH) bid. Although, Sprint had previously drawn a waiver from SoftBank to seek more information on DISH's proposal, it did not receive any relaxation on terms that would allow it to disclose non-public information. Further, Sprint was also not allowed to consider the acquisition bid offer from DISH.
In Oct 2012, it was reported that the company was in negotiations to sell about 70% of its stake to Softbank for a total consideration of $20.1 billion. However, this offer was trumped by DISH which made a counter offer of $7 per share (inclusive of $4.76 in cash and 0.05953 shares in DISH for each Sprint share).
Despite some of the major shareholders of Sprint walking in favor of the DISH proposal considering it lucrative, the company specified that its support toward SoftBank's acquisition proposal remains unchanged. The reason behind such consideration could be the negatives attached to the DISH offer.
While the successful completion of the deal might enable Sprint to overcome its spectrum shortage issue and gain financial strength, the deal will also result in a few negative synergies for both the companies. The complete acquisition of Sprint Nextel will inflate DISH Network's leverage position by a huge margin as the combined debt of both the companies will stand at nearly $28 billion. Further, the merged company will have to pay nearly $600 million as break-up fee to SoftBank, if it wishes to terminate its arrangements with the latter.
We believe the fate of the Sprint, Softbank and DISH trilogy will meet some conclusion in mid-summer when Sprint shareholders vote for the approval of the SoftBank deal on Jun 12. Meanwhile, DISH and SoftBank both are gearing up for their big buyout.
According to market reports, SoftBank raised around $3.3 billion in Apr 2012 in a dual-tranche bond issued in dollars and Euros to fund the Sprint acquisition, following issuance of 300 billion yen in bonds March. Recent reports suggest that the company is also issuing 400 billion yen ($3.9 billion) in bonds to retail investors to fund its billion dollar Sprint buyout
On the other hand, DISH is also adopting similar strategies to fund its proposed deal. DISH Network raised $2.3 billion debt from the market and is further negotiating with firms like Barclays Plc, Macquarie Group, Jefferies and the Royal Bank of Canada to facilitate around $9 billion in debt to get through the Sprint deal.
Sprint, which operates with telecom giantssuch as Verizon Communications (NYSE:VZ), currently has a Zacks Rank #3 (Hold).
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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