CHICAGO, Aug. 2, 2011 /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: Archer Daniels Midland Company
(NYSE: ADM), Incyte Corporation (Nasdaq: INCY), Eli Lilly
and Company (NYSE: LLY), Pfizer (NYSE: PFE) and
Novartis (NYSE: NVS).
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Here are highlights from Monday's Analyst Blog:
Earnings Preview: ADM
Archer Daniels Midland Company (NYSE: ADM), one of the
leading food processing companies in the world, is scheduled to
report its fourth-quarter 2011 financial results before the opening
bell on August 2, 2011.
The current Zacks Consensus Estimates for the quarter is
earnings of 84 cents a share. For the
quarter under review, revenue is expected at $20,484.0 million, according to the Zacks
Consensus Estimate.
Third-Quarter 2011 Summary
Archer Daniels reported robust third-quarter 2011 results. Net
income for the reported quarter was $578.0
million or 86 cents per share
compared with $421.0 million or
65 cents per share in the year-ago
quarter. Quarterly earnings also outpaced the Zacks Consensus
Estimate by a penny.
The robust quarterly result was primarily attributable to
increased segmental profit, partially offset by negative
discrepancy from changes in Last-In-First-Out (LIFO) inventory
valuations caused by higher agricultural commodity prices.
ADM's quarterly net sales climbed 32.6% year over year to
$20,077.0 million, beating the Zacks
Consensus Estimate of $17,279.0
million. The growth in net sales was mainly attributable to
a robust jump of 37.6% in Agricultural Services to $9,340.0 million, a rise of 30.6% in Oilseeds
Processing revenues to $6,642.0
million and an increase of 28.2% in Corn Processing revenues
to $2,513.0 million.
Fourth-Quarter 2011 Zacks Consensus
The analyst covered by Zacks expects Archer Daniels Midland to
post fourth-quarter 2011 earnings of 84
cents a share, which is higher than earnings of 69 cents delivered in the prior-year quarter. The
current Zacks Consensus Estimate ranges between earnings of
74 cents and $1.00 a share.
Zacks Agreement & Magnitude
Of the 12 analysts following the stock, only one analyst
revisited and downgraded its estimate, over the last 7 days for the
fourth quarter of fiscal 2011. Two out of 3 analysts revisiting
their estimates have downgraded and only one has upgraded it over
the last 30 days.
Our View
Archer Daniels Midland is in the midst of a brisk expansion
strategy, which includes expanding crushing capacities in
North America, and fertilizer
blending and biodiesel capacities in South America. Moreover, in Europe, the company has acquired processing
facilities in Czech Republic and
Germany.
These initiatives offer a strong upside potential to the
company. Moreover, the world is facing tight supply of
milling-quality wheat resulting from continued reductions in the
production of Australian wheat crop and depletion in supply from
Europe.
The U.S. is becoming the best source for milling quality wheat
due to a variety of buyers in North
Africa and Middle East. ADM
is expected to benefit from this as it has a substantial quantity
of milling wheat in storage.
Incyte Does Not Excite
Incyte Corporation's (Nasdaq: INCY) second quarter 2011
loss of $0.41 per share was wider
than the Zacks Consensus Estimate by $0.05. The wider loss suffered in the reported
quarter was attributable to lower revenues and higher operating
expenses. The company earned $0.02
per share in the corresponding period of 2010.
Total revenues in the reported quarter declined to $16.8 million versus $49.8
million recorded a year-ago. The year-ago revenues were
boosted by the recognition of $33.0
million as milestone payments received from partners Eli
Lilly and Company (NYSE: LLY) and Pfizer (NYSE: PFE).
Revenues in the second quarter of 2011 fell short of the Zacks
Consensus Estimate of $20
million.
Total cost and expenses in the reported quarter climbed 60.0% to
$57.9 million. Both R&D expenses
(up 59.9%) and SG&A expenses (up 58.4%) were on the upswing
during the quarter. Incyte's efforts to develop its pipeline
contributed to the rise in R&D expenses. The jump in SG&A
expenses was attributable to the expenses incurred by the company
for INCB18424 (also known as INC424).
The candidate is being developed to treat patients suffering
from myelofibrosis (MF), a rare bone marrow disorder. Incyte
submitted a new drug application (NDA) to the US Food and Drug
Administration (FDA) seeking marketing approval for the MF
candidate in June 2011.
Approval has been sought on the basis of encouraging data from
two late-stage studies - COMFORT (COntrolled MyeloFibrosis Study
with ORal JAK Inhibitor Therapy) - I (US trial) and COMFORT-II
(European portion of the study).
While Incyte was responsible for the COMFORT-I study, COMFORT-II
was conducted by partner Novartis (NYSE: NVS). Management
expects a decision from the FDA regarding INCB18424 by year-end.
Novartis is seeking approval of the candidate in the European
Union.
2011 Outlook
Incyte maintained its outlook for R&D and SG&A expenses.
R&D expenses for 2011 are expected in the range of $175 million - $185 million. SG&A
expenses are expected in the range of $50
million-$55 million in 2011. Incyte also projects 2011 cash
usage in the range of $185 million-$200
million.
Our Recommendation
Currently, we have a Neutral stance on Incyte in the long run.
The company carries a Zacks #3 Rank (Hold rating) in the short
run.
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