Health & Fitness
Health and Fitness
Health and Fitness
Mon, July 19, 2010
Sun, July 18, 2010
Sat, July 17, 2010
Fri, July 16, 2010 Novartis AG, Altria, Goodyear, Halliburton and Schlumberger
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Novartis AG (NYSE: [ NVS ]), Altria (NYSE: [ MO ]), Goodyear (NYSE: [ GT ]), Halliburton Co. (NYSE: [ HAL ]) and Schlumberger Ltd. (NYSE: [ SLB ]).
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Here are highlights from Thursdaya™s Analyst Blog:
Novartis Tops, Lifts View
Novartis AG (NYSE: [ NVS ]) posted 2010 second-quarter results before the opening bell on Thursday. The company recorded a 19.2% growth in net income to $2.4 billion from $2.0 billion in the year-ago quarter. Excluding special items, adjusted earnings per ADR came in at $1.20, which were well ahead of both the year-ago results of $1.05 and the Zacks Consensus Estimate of $1.12 per ADR.
Quarterly Details
During the quarter, Novartisa™ total sales logged a growth of 11% to $11.7 billion from $10.5 billion in the prior-year quarter. Higher sales were driven by a 12% growth in volumes, helped by the introduction of new products, including those related to the A(H1N1) flu pandemic, partially offset by a 1% decline caused by lower prices.
In terms of segments, Pharmaceuticals -- the flagship division -- grew 8% to $7.7 billion from $7.1 billion in the year-ago period. Novartis grew revenues across all sub-segments, including Cardiovascular & Metabolism (+4% y-o-y), Oncology (+11% y-o-y), Neuroscience & Ophthalmics (+14% y-o-y), Respiratory (+8% y-o-y) and Immunology & Infectious Diseases (+6% y-o-y).
The companya™s two major drugs in the Pharmaceuticals segment, Diovan and Gleevec, posted growth rates of 1% and 9% to $1.6 billion and $1.1 billion, respectively. Geographically, Canada and Latin America, Asia/Africa/Australasia, U.S. and Europe grew 22%, 12%, 7% and 3%, respectively.
Novartisa™ Sandoz division grew 11% to $2.0 billion from $1.8 billion in the year-ago quarter. The increase was mainly attributable to new product launches and contribution from the recently acquired Austria-based firm EBEWE Pharmaa™s specialty generic business. In terms of regions, U.S., Asia/Africa/Australasia, and Canada and Latin America recorded strong growth of 37%, 22% and 14%, respectively, while Europe fell 2% year over year.
Novartisa™ Consumer Health segment rose 7% year-over-year to $1.5 billion driven by growth in over-the-counter (OTC), Animal Health and CIBA Vision businesses. The division recorded a 13% growth in Asia/Africa/Australasia followed by growth of 12%, 8% and 1% in the U.S., Canada and Latin America and Europe.
PPI Falls for 3rd Straight Month
The Producer Price Index(PPI) fell for the third month in a row. In June it was down 0.5% on a headline basis, following declines of 0.3% in May and 0.1% in April. If one strips out food and energy prices to get to core PPI inflation, it was up 0.1% after back-to-back rises of 0.2% in April and May.
This month it was food prices that showed the sharpest decline, falling 2.2%, a big acceleration to the downside from the 0.6% decline in May and the 0.2% drop in April. Energy prices have also declined for three months in a row, although the 0.5% decline this month was not nearly as sharp as the 1.5% drop in May, or even the 0.8% decline in April.
On a year-over-year basis, inflation was 2.8%, down from 5.3% in May and a peak of 6.0% in March. Most of that inflation happened in the last half of 2009. So far this year, prices for finished consumer goods at the wholesale level are down 0.9%. On a year-over-year basis, the prices for finished capital goods are up just 0.3%.
If we look further up the production pipeline, it does not look like there is that much inflationary pressure. Prices for intermediate goods (to keep finished, intermediate and crude goods straight, think bread, flour and wheat) fell by 0.9%, more than reversing the 0.4% increase in May. On a year-over-year basis, intermediate goods prices were up 6.4% down from 8.5% in May.
Prices for crude goods fell for the third month in a row, dropping 2.4% on top of drops of 2.8% in May and 1.2% in April. Crude goods are essentially commodities, and as such tend to be very volatile in their pricing. Year over year they are up 13.3%, but that is down from up 21.2% year over year in May.
This report is one more indication that inflation is not a problem right now, and that those who feared the big expansion of the Fed balance sheet in response to the financial crisis would lead to high inflation were dead wrong. It appears that the much bigger threat to the economy now is deflation.
Very few finished consumer good areas are showing any significant price increases on a year-2over-year basis at the wholesale level. Outside of food and energy, the only categories of goods that have seen prices rise by more than 5% over the last year are Jewelry up 12.2% (reflecting the rise in the price of gold), Tires up 8.4% and Tobacco up 7.4%. That pricing flexibility is probably good news for the likes of Altria (NYSE: [ MO ]) and Goodyear (NYSE: [ GT ]).
Earnings Preview: Halliburton
Oilfield services giant Halliburton Co. (NYSE: [ HAL ]) is scheduled to report its second quarter 2010 results on Monday, July 19, before the opening bell.
The Zacks Consensus Estimate for the to-be-reported quarter is 36 cents per share (with an upside of 3%), compared to the 30 cents per share earned in the year-earlier period.
First Quarter Recap
The world's second-largest oilfield service provider after Schlumberger Ltd. (NYSE: [ SLB ]) reported profit of 28 cents per share in the first quarter of 2010, 2 cents above the Zacks Consensus Estimate. Halliburton believed strengthening activity in North America helped it to top expectations, offsetting weak demand across Latin America. During the quarter, North America accounted for approximately 45% of the companya™s total revenue as well as its operating income.
Drilling Activity Picks up in North America
As reinforced by the first quarter results, the all-important North American activity levels (to which the company is heavily exposed through its market-share-leading pressure-pumping business) are showing signs of strength and sustainability. Margins had bottomed in most basins during the third quarter of 2009 and now appear to be rapidly gaining steam, as the industry looks to balance supply growth with recovering hydrocarbon demand.
Pressure pumping (an umbrella term used to describe a number of vital services performed on new and existing wells) demand is on a secular uptick and the market is now enjoying around 100% effective utilization. Pricing, which remains well below 2006 levels, has increased meaningfully from the last yeara™s lows.
Halliburton is best suited to gain leverage from these factors, having the highest exposure to pressure pumping. As such, we expect the company to report very strong North American operating income and revenue growth.
Agreement of Analysts
The following table reflects a strong positive agreement among the analysts regarding Halliburtona™s outlook. In particular, we see a notable number of estimate revisions over the past 30 days.
Out of 28 analysts covering the stock, 15 have revised upwards their estimates for the second quarter of 2010, while 3 have gone in the opposite direction.
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