CHICAGO, Sept. 7, 2011 /PRNewswire/ -- Zacks Equity
Research highlights Humana, Inc. (NYSE: HUM) as the Bull of
the Day and Abaxis, Inc. (Nasdaq: ABAX) as the Bear of the
Day. In addition, Zacks Equity Research provides analysis
Medtronic (NYSE: MDT), Boston Scientific (NYSE: BSX)
and St Jude Medical (NYSE: STJ).
(Logo:
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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:
Humana, Inc.'s (NYSE: HUM) second-quarter earnings
modestly beat the Zacks Consensus Estimate, owing to improved
consolidated premiums and ASO fees that also drove the benefit
ratio along with improvement in medical and specialty memberships.
Humana benefits from the new rule in health care reform, which led
to an efficient deployment of capital.
The upcoming AMS acquisition is further expected to enhance the
company's Medicare coverage. Overall, we expect an upside to Humana
shares on the basis of higher membership, surplus cash flows
generation, favorable prior-period claims development, and higher
projected segment earnings.
Our six-month target price of $89.00 equates to 11.6x our earnings estimate for
2011. Combined with the $1.00 per
share annual dividend, this target price implies an expected total
return of 20.7% over that period. This is consistent with our
Outperform recommendation on the shares.
Bear of the Day:
Abaxis, Inc. (Nasdaq: ABAX) reported an EPS of
$0.10 in the first quarter of fiscal
2012, 37.5% down from the year-ago quarter as well as the Zacks
Consensus Estimate of $0.16. The
company has been witnessing several challenges that led to
continued sluggish growth of the company's sales. Moreover, margins
continued to disappoint due to increased expenses in both medical
and veterinary markets.
We are also apprehensive based on Abaxis' dependency on
distributors to sell its products. Although there is immense
potential in the human and veterinary diagnostic market, we are
concerned about the company's soft international sales, competitive
pressure as well as exposure to patent issues which could have an
adverse effect on its top line.
Consequently, we maintain our Underperform recommendation for
Abaxis. Abaxis' current trailing 12-month earnings multiple is
42.2X, compared to the 24.3X average for the peer group and 16.4X
for the S&P 500.
Latest Posts on the Zacks Analyst Blog:
Medtronic Upgraded to Neutral
Recently, we upgraded Medtronic (NYSE: MDT) to Neutral
with a target price of $36.00.
Medtronic reported an adjusted EPS of 79
cents in the first quarter of fiscal 2012, in line with the
Zacks Consensus Estimate and a penny lower than the year-ago
quarter.
Revenues were $4.049 billion in
the quarter, up 7% year over year (up 2% at constant exchange rates
or CER) and higher than the Zacks Consensus Estimate of
$3.991 billion. Medtronic recorded
46% of its total sales from the international market during the
quarter, which climbed 19% year over year (7% at CER) to reach
$1.843 billion. As a result of the
company's focus on emerging markets, revenues from these regions
increased 30% (25% at CER) to $408
million.
About 60% of its business is growing at 8% based on new products
resulting in improvement in pricing and market share. Moreover, it
is encouraging to note that the company recorded double-digit
growth in several businesses including transcatheter valves, AF
Solutions, Endovascular, Uro/Gastro and CGM. However, ICDs and
Spinal, accounting for the remaining 40% of the business declined
6%. Despite several challenges, the company is undertaking
initiatives to revive its top line. This includes penetrating
international markets, portfolio expansion and restructuring
initiatives, which should benefit the company over the long
term.
However, Medtronic continues to witness several challenges for
its core segments – ICDs and Spinal. In ICDs, the performance was
affected by many factors including DOJ's investigations and the
JAMA article published in January
2011. To worsen the situation, the Spine Journal
found that surgeons missed to mention some complications
encountered with Medtronic's bone-growth protein (rhBMP-2) in
clinical trials. Following the publication of this article, sales
of Infuse plunged sharply. The company also operates in a highly
competitive environment with the presence of players such as
Boston Scientific (NYSE: BSX) and St Jude Medical
(NYSE: STJ).
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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