Science & Technology
Science and Technology
Science and Technology
Wed, July 21, 2010
Tue, July 20, 2010 Jinpan International, Whole Foods Market, Amgen, Novartisa? and GlaxoSmithKline
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Jinpan International (Nasdaq: [ JST ]), Whole Foods Market, Inc. (Nasdaq: [ WFMI ]), Amgen (Nasdaq: [ AMGN ]), Novartisa™ (NYSE: [ NVS ]) and GlaxoSmithKline (NYSE: [ GSK ]).
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Here are highlights from Mondaya™s Analyst Blog:
Jinpan: A Canary for Chinese Stocks?
Sometimes there is an event that goes virtually unnoticed by the investing community but that later, in hindsight, becomes the "canary in the coal mine".
The canary, for investors, is the event that serves as an early warning of a change in direction for an economy, an asset class or a particular stock sector.
Jinpan International's (Nasdaq: [ JST ]) announcement on July 16 that it would cut full year guidance was a canary in the coal mine event for Chinese stocks.
It's no secret that Chinese stocks are in a bear market and have been since Oct 21, 2009 when shares of Chinese companies traded on the U.S. exchanges started to "roll over".
The Shanghai Composite Index, itself, hasn't done much better, falling into bear market territory a few weeks ago, down about 25% in 2010.
Whole Foods Upped to Outperform
We recently upgraded our recommendation on Whole Foods Market, Inc. (Nasdaq: [ WFMI ]), one of the worlda™s leading natural and organic foods supermarket chains, to Outperform from Neutral with a target price of $42.00.
Whole Foods Market with a strong brand image, and marketing and merchandising expertise, offers investors one of the strongest growth profiles in the industry. The stock is poised to surge once the economy revives and demand for healthier and natural food improves.
Whole Foods has been spurring its sales through new store openings, acquisitions and comparable store sales growth. Given the fragmented food retailing industry, the company has a track record of successfully integrating regional acquisitions. Its largest acquisition has been Wild Oats Markets, which helped boost comps, margins and increase store counts, lowering the risk of future expansion.
The stringent cost-control measures, effective inventory management, and improved store-level performance are driving earnings growth. Whole Foods also has been revamping its pricing strategy and concentrating more on value offerings, while maintaining healthy margins. In the last four quarters, gross margin has been in the range of 34% to 35%.
An uptrend in comparable and identical-store sales was noticed in fiscal year 2009 due to improved transaction counts. Whole Foods expects the growth momentum in sales to continue through fiscal 2010. Management now anticipates an increase of 11% to 12% in total sales, driven by a 6% to 7% rise in comparable-store sales and a 5.5% to 6.5% growth in identical-store sales.
Priority Review for Amgen Drug
Amgen (Nasdaq: [ AMGN ]) recently announced that it has received priority review status from the US Food and Drug Administration ("FDA") for its Biologics License Application ("BLA") for denosumab. Amgen is looking to get denosumab approved for delaying skeletal related events in patients with advanced cancer.
The BLA was filed by Amgen in mid-May 2010. Given the priority review status, a final response from the FDA on the candidatea™s approvability should be out within 6 months from the filing date (FDA action date: November 18, 2010).
The BLA includes data from several studies including three pivotal phase III studies that compared denosumab with Novartisa™ (NYSE: [ NVS ]) Zometa. Amgen is seeking approval for this indication in other territories as well including the European Union, Switzerland, Canada, and Australia. Amgen and partner Daiichi-Sankyo are looking to file for approval in Japan as well.
Denosumab a Potential Blockbuster
Denosumab (trade name: Prolia) is currently approved in the EU and the US. While denosumab gained approval in the EU for the treatment of osteoporosis in postmenopausal women at increased risk of fractures and the treatment of bone loss associated with hormone ablation in men with prostate cancer at increased risk of fractures, the US Food and Drug Administration (FDA) approved the product for the treatment of osteoporosis in postmenopausal women at increased risk of fractures or patients who have failed or are intolerant to other osteoporosis treatments.
Although treatments for the postmenopausal osteoarthritis ("PMO") indication are currently available, denosumab could have an advantage over existing treatment options due to its convenient dosing regimen. Denosumab needs to be injected only twice a year as opposed to other treatments, which require more frequent dosing.
Denosumaba™s approval for the PMO indication is a major positive for Amgen and we believe approval for additional indications will help the drug achieve blockbuster status. Amgen has a collaboration agreement with GlaxoSmithKline (NYSE: [ GSK ]) for denosumab for the postmenopausal osteoporosis indication in Europe, Australia, New Zealand and Mexico.
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