CHICAGO, July 16, 2013 /PRNewswire/ -- Zacks Equity Research highlights Cree (Nasdaq: CREE-Free Report) as the Bull of the Day and Intuitive Surgical (Nasdaq: ISRG-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN-Free Report), Roche (OTC:RHHBY-Free Report) and Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX-Free Report).
Here is a synopsis of all five stocks:
Now that we are in the heart of earnings season, many investors are zeroing in on company reports to drive the market. While investors seem to be pretty bullish on financials for this quarter, one segment that may also provide some earnings growth is technology.
However, not just any tech company will do, as you will need to drill down into a few key segments for strong earnings growth. In particular, the semiconductor segment could be an interesting choice, thanks to the high Zacks Industry Ranks for this space, and the surging stock prices of many companies in this corner of the tech world. A number of semiconductor firms fit this bill as solid investments during this time frame, but one stands out for its promise this earnings season; Cree (Nasdaq: CREE-Free Report).
Cree is a North Carolina-based company that focuses on LED products that are used in a number of applications including game displays, automobiles, signage, among others. Beyond their LED division, the company also makes power conversion products, Radio Frequency-based items, and semiconductor materials as well.
The firm is becoming increasingly well-known as demand increases for energy efficient applications across the board. Plus, it doesn't hurt that the firm's stock has risen by almost 200% in the past 52 weeks alone. While this is obviously an already amazing level of stock price growth, there is plenty of reason to believe that this trend can continue, especially if you look to earnings estimates for the company.
Despite concerns over sweeping healthcare law changes, the medical sector has actually been a solid performer so far this year. In fact, the main ETF for the space, the Health Care Select Sector SPDR has easily outperformed the S&P 500 in the first half of 2013, trouncing the broad market by over 700 basis points.
However, some corners of the market could be facing troubles—especially in the medical device and equipment space—as concerns over healthcare spending are starting to take their toll on a number of companies in the space, as many are forgoing new purchases of equipment, or are buying less. One such company that has been the poster child of this trend and has seen its stock price suffer as a result is certainly Intuitive Surgical (Nasdaq: ISRG-Free Report).
ISRG is probably best known for its da Vinci Surgical System which helps surgeons to perform operations with increased precision and control. The basis of the system uses robotics, while there are also HD 3D vision systems, and proprietary instrument technologies as well.
Sales of this innovative device rose pretty much across the globe, though they struggled in the American market, according the preliminary Q2 earnings. Their key product saw only 90 sales in the U.S. market, compared to 124 a year ago, highlighting a very sluggish sales market (also read Medical Device ETFs Slump on Intuitive Surgical Crash).
This was especially troubling because the company pinned the lower sales on the difficult environment in the U.S., and the lack of hospital dollars for new technologies. This bearish outlook is driving the stock sharply lower, with prices for ISRG collapsing by about 14% in the past month alone.
And with the poor outlook from company management, many analysts seemed to have no choice but to slash their expectations for the company in the near term. In the past week, eight estimates have been cut for the current and next quarters, as well as the current and next year periods as well.
Alexion on Roche's Radar?
According to Bloomberg News, Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN-Free Report) is being eyed by Roche (OTC:RHHBY-Free Report). People familiar with the situation, who declined to be identified, commented that Roche is seeking funds to finance the deal. Alexion Pharma, with a market cap of around $20 billion, surged more than 12% in Friday trading on the Nasdaq following rumors of the potential sale.
However, according to Reuters, Alexion Pharma's expensive valuation could prevent the transaction from materializing. Based on 2013 earnings estimates, Alexion is trading at 42.9x compared to the S&P average of 15.6x.
Roche is aiming to diversify its product portfolio through this potential takeover. The Swiss drugmaker boasts a strong oncology portfolio. The acquisition of Alexion Pharma, if it materializes, would give Roche access to Alexion Pharma's sole marketed drug Soliris.
Soliris is available for the treatment of paroxysmal nocturnal hemoglobinuria (PNH), a rare genetic disorder. In Sep 2011, the US Food and Drug Administration (FDA) cleared Soliris for treating children and adults suffering from atypical hemolytic uremic syndrome, an ultra-rare genetic disorder.
In Nov 2011, a similar approval for the drug was granted in the EU. Soliris is being studied for additional indications. The drug recorded sales of $1.13 billion in 2012, up 45%.
Strong Soliris sales for the PNH indication have helped the company achieve profitability since the second quarter of 2008. Sales of the drug have been boosted further by its label expansion into the aHUS indication.
Apart from rumors regarding Alexion Pharma's potential takeover, Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX-Free Report) is another stock in the biopharma space which is in the news as an acquisition target.
Alexion Pharma currently carries a Zacks Rank #3 (Hold).
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