For Immediate Release
Chicago, IL – March 12, 2012 – Zacks Equity Research highlights:
TAM S.A. - ADR ( TAM) as the Bull of the Day
and Westamerica Bancorp ( WABC) as the Bear
of the Day. In addition, Zacks Equity Research provides analysis on
Boston Scientific Corporation ( BSX),
Medtronic ( MDT) and St Jude
Medical ( STJ).
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:
We upgrade our recommendation on TAM S.A. -
ADR ( TAM) from Neutral to Outperform. The company
foresees a strong and growing market in 2012, and hence strives to
sustain its competitive position with increased number of flights,
destinations and connections.
TAM's fleet development and renovation/restructuring programs
are targeted to enhance efficiency besides enforcing strict cost
control. The company's focus on economy-travel and retail products,
targeted to serve rising demand across the route network, appears
promising for future revenue growth.
TAM recorded EPS of $0.34 per ADR and a revenue of $2,000
million in fourth-quarter 2011. Our target price of $28.00 is
derived from a P/E ratio of 14.2x 2012 EPS.
Bear of the Day:
We have downgraded our long-term recommendation
on Westamerica Bancorp ( WABC) from
Neutral to Underperform based on weak fourth-quarter results and an
overall sluggish economic environment. The company's fourth quarter
2011 earnings slightly missed the Zacks Consensus Estimate.
Results were negatively impacted by reduced revenues, partially
offset by lower non-interest expenses. The company's credit quality
continued to show improvement in the quarter. We believe that a
weak interest rate environment, and low investment returns will
restrict any significant bottom-line improvement in the near
term.
Our six-month target price of $43.00 equates to about 14.0x our
earnings estimate for 2012. Combined with the $1.48 per share
annual dividend, this price target implies an expected negative
return of 8.5% over that period, which is consistent with our
long-term Underperform recommendation on the shares.
Latest Posts on the Zacks Analyst Blog:
BSX to Acquire Cameron Health
In an attempt to strengthen its Cardiac Rhythm Management
(“CRM”) business, Boston Scientific
Corporation ( BSX) is on its way to acquire privately
held, California based Cameron Health for an upfront payment of
$150 million. This deal will provide the company with a novel
defibrillator, the S-ICD system, the world’s first and only
commercially available subcutaneous implantable cardioverter
defibrillator (“ICD”).
The S-ICD system scores over traditional ICDs with respect to
placement as the former can be placed beneath the skin and leaves
the heart and blood vessels untouched. The traditional ICDs, on the
other hand, require thin, insulated wires (leads) to pass through
the venous system and into the heart. According to Kenneth A.
Ellenbogen, Professor of Medicine and Director of the
Electrophysiology Laboratory at the Medical College of Virginia,
the S-ICD system should become first-line therapy for patients who
may benefit from not having a lead in the heart.
The S-ICD system received CE Mark approval in 2009 although the
device has yet to be approved in the US. With an expedited review
status, Cameron Health submitted its PMA application to the US Food
and Drug Administration (FDA) in December 2011. Boston Scientific
anticipates FDA approval for the S-ICD System in the first half of
2013.
Besides upfront payment, another potential $150 million would be
paid to Cameron Health upon FDA approval of the S-ICD System. Over
the 6-year period, following FDA approval of the device, an
additional $1.050 billion of potential payments would be made
contingent upon achievement of certain revenue-based
milestones.
Boston Scientific will fund these payments through the cash flow
of its business. The company’s cash flow balance has been
quite buoyant and adjusted free cash flow for the latest fiscal
came in at $1.27 billion. The transaction, likely to be completed
in the second or third quarter of the current fiscal, would dilute
2012 bottom line (on an adjusted basis) by a penny and almost
break-even in 2013.
Recommendation
The challenges at Boston Scientific’s core segments consisting
of stents and defibrillators do not show any sign of near-term
abatement. The company continues to experience pricing pressure in
the US and Europe. Additional challenges are softness in procedural
volume due to economic uncertainties and competitive product
launches. This scenario has affected other players in the MedTech
sector as well, such as Medtronic ( MDT)
and St Jude Medical ( STJ).
Despite the various headwinds currently at play, product
launches made in the recent past should provide some cushion to its
top line. Several other products are slated for launch over the
year, which should benefit the top line.
We have a Neutral recommendation for Boston Scientific. The
stock retains a Zacks #3 Rank (“Hold”) in the short term.
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
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BOSTON SCIENTIF (BSX): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
TAM SA-ADR (TAM): Free Stock Analysis Report
WESTAMER BANCP (WABC): Free Stock Analysis Report
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