Health & Fitness
Health and Fitness
Health and Fitness 
Wed, January 21, 2009
Zacks Bull & Bear of the Day Highlights: AMAG Pharmaceuticals, BJ Services, Logitech, Regions Financial and PetMed Express
CHICAGO--([ BUSINESS WIRE ])--Zacks Equity Research picks AMAG Pharmaceuticals Inc. (Nasdaq: [ AMAG ]) as Bull of the Day and BJ Services Company (NYSE: [ BJS ]) as Bear of the Day. In addition, the analysts at Zacks Equity Research discuss the latest on Logitech International (Nasdaq: [ LOGI ]), Regions Financial Corp. (NYSE: [ RF ]) and PetMed Express (Nasdaq: [ PETS ]).
Full analysis of all these stocks is available at: [ http://at.zacks.com/?id=2678 ]
Bull of the Day
AMAG Pharmaceuticals Inc. (Nasdaq: [ AMAG ]) develops superparamagnetic iron oxide nanoparticles for use in pharmaceutical products. The company's focus is on developing IV iron replacement therapy for anemia in chronic kidney disease and imaging agent to aid in diagnosis.
The company filed the NDA [New Drug Application] for its lead drug, Ferumoxytol, in December 2007, and we expect FDA approval to come in 1H09. Clinical data in over 1,700 patients indicate an excellent safety profile for the drug with lower incidents of heart problems.
Clinical results, and eventual approval for additional indications, should ensure strong growth in the coming years. We maintain our Buy rating on the shares of AMAG with a target price of $55.
Bear of the Day
Houston-based BJ Services Company (NYSE: [ BJS ]) provides pressure pumping and other oilfield services to oil and gas exploration and production companies all over the world. Pressure pumping comprises cementing and stimulation services used during the completion of new wells along with the restoration and repair of existing wells. The company also provides tubular services, inspections of pipe connections, and specialty chemical treatments.
We are downgrading BJ Services shares to Sell from Hold to reflect our growing concerns about the weakening outlook for the North American pressure-pumping market. Weak natural gas prices and continued credit market turmoil have prompted E&P [Exploration and Production] players to curtail spending plans, significantly affecting the outlook for players such as BJ Services.
While the company should fare better than many of its smaller peers, given the size and scope of its operations and its strong financial health, it is nevertheless faced with pricing pressures and margin compression in the coming quarters.
Recent Analysis from the Analyst Blog
Logitech International's Grim Numbers
Logitech International (Nasdaq: [ LOGI ]) announced financial results for the third quarter of fiscal year 2009. Sales for Q3-09 were $627 million (as compared to our estimate of $637 million and the average Street estimate of $699 million), a decrease of 16 percent versus $744 million in the same quarter last year.
Operating income was $43 million, a decrease of 63 percent compared to $116 million in the same quarter a year ago. Net income was $40 million - = $0.22 per share - (as compared to our estimate of $0.39 per share and the average Street estimate of $0.43) versus Q3-08 net income of $134 million - = $0.71 per share - which included a net realized gain on sales of short-term investments of $27.8 million and an impairment loss of $5.5 million on the value of short-term investments. Gross margin for the Q3-09 was 29.9 percent compared to 36.9 percent in Q3-08.
Logitech's retail sales for Q3-09 declined 16 percent year-over-year, with sales down by 21% in the Americas and 19% in Europe, Middle East & Africa, while sales were up by 8% in Asia; OEM [original equipment manufacturer] sales were down by 11 percent.
Regions Financial Misses Ests
Prior to market open, Regions Financial Corp. (NYSE: [ RF ]) reported its earnings for 4Q08. Core results were a negative $0.35 per share, versus $0.24 per share in 4Q-07.
The difference from our expectations reflected a higher-than-expected provision for losses (from the accelerated disposition of problem assets), impairment of MSRs [mortgage servicing rights], the effects of preferred stock issuance (via the Treasury's Capital Purchase Program), and lower-than expected service charge on deposits and Trust income, which were somewhat offset by the tax settlement benefit covered for tax years 1999-2006.
Credit quality metrics also continued the negative expansion from the credit crisis. Prior to the conference call, we are preliminarily maintaining our FY09 earnings expectation at $0.80 per share. We are also lowering our price target to $4.90 per share, but and maintaining our Hold recommendation on the shares of RF given the intraday price of $5.00 per share.
PetMed Express: Good Entry Point
Before the bell today, PetMed Express (Nasdaq: [ PETS ]) reported solid results for the third quarter of fiscal 2009. The company had sales of $43.4 million, up 16% over the third quarter of fiscal 2008, and earnings per share of $0.21, up 15% over the year-ago quarter. Sales were slightly above the Zacks consensus estimate of $43 million, and its EPS beat the Zacks consensus by $0.01.
That said, even PetMed couldn't completely escape the clutches of consumer tightening their belts. The company's third quarter gross margin decreased by 70 basis points year-over-year (and was 30 basis points lower than our forecast), but the company was able to reduce its general and administrative expense by 40 basis points to help offset its lower gross margin.
Given its solid sales trends in a difficult environment, cost-cutting efforts, and clean balance sheet ($44 million in cash and $0 debt), PetMed Express remains an attractive stock. We view today's sell-off as good entry point. We maintain our Buy rating and target price of $21.
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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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