OtisMed Corp. is a privately held software technology firm that focuses on customizable instrumentation complementing Stryker’s Triathlon Knee System, as well as other Stryker implants. Stryker will incorporate OtisMed as part of its Orthopaedics division.

Mutoh Co. Ltd. is a Japanese company and a leading provider of equipment, products, instruments and services to the medical and scientific communities. On the other hand, Synergetics USA, Inc. is a leading supplier of precision microsurgery instrumentation.
 
Mutoh and Synergetics acquisitions give Stryker access to different assets used to produce Sonopet Ultrasonic Aspirator control consoles, hand pieces and accessories as well as the rights to market and sell these products globally. Post the completion of the acquisition, Stryker will incorporate these two companies into its Instruments division.
 
The acquisitions widen Stryker’s product portfolio and will boost its top-line. Stryker is one of the world’s largest medical device companies operating in the global orthopedic market. In the orthopedic space, Stryker faces competition from major players like Zimmer Holdings (ZMH), Conmed Corporation (CNMD), Smith & Nephew (SNN), Johnson & Johnson/DePuy (JNJ), and Wright Medical (WMGI).

Chicago, IL – November 11, 2009 – 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: Boston Scientific Corporation (BSX), Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

BSX Settles, Lowers Results

Boston Scientific Corporation (BSX) settled its $296 million lawsuit with the U.S. Department of Justice (DOJ) related to product advisories issued by its Guidant subsidiary in 2005. The litigation pertained to alleged violations of the Food, Drug, and Cosmetic Act by Guidant. The allegations were reported prior to Boston’s acquisition of Guidant in 2006.

Boston has recorded the litigation expense in its third quarter of fiscal 2009 results and updated its income statement accordingly. The expense has lowered the company’s GAAP earnings per share by 19 cents into a loss per share of 6 cents in the third quarter of 2009. Adjusted figures remained unaffected by this charge.

Boston has also lowered its full fiscal 2009 GAAP earnings per share guidance to a range of 23 to 28 cents, compared to its prior guidance of 43 to 48 cents. The company’s adjusted earnings per share guidance remained unchanged at 75 to 79 cents.

Boston recently released its third quarter 2009 results. Adjusted earnings per share were 19 cents, beating the Zacks Consensus Estimate by 5 cents and the year-ago earnings by 3 cents. Net sales in the quarter were $2.0 billion, increasing approximately 2% year over year.

Boston Scientific is a manufacturer of medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ).

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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Chicago, IL – November 10, 2009 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Big Pharma & Biotech sector, including Alcon (ACL), Novartis (NVS), Gilead Sciences (GILD), Biogen Idec (BIIB) and Acorda Therapeutics (ACOR).

In the pharma space, we are positive on stocks like Alcon (ACL) and Novartis (NVS). We believe these companies will continue witnessing revenue growth based on continued international penetration, new product launches and market share expansion. Pipeline expansion through in-licensing deals and acquisitions should also add to growth.

Novartis should see strong vaccine sales this flu season. The company has received approval from the U.S. Food and Drug Administration for its swine flu vaccine, which should drive revenues.

Although we have Neutral ratings on names like Johnson & Johnson and Abbott Labs, we maintain a positive outlook on these stocks given their diversified revenue base, strong business segments, contributions from recent acquisitions and impressive late-stage pipelines. We also have a positive outlook on Bristol-Myers, which has a strong presence in attractive areas like biologics, cancer and cardiovascular drugs.

In the biotech space, we are positive on names like Gilead Sciences (GILD) and Biogen Idec (BIIB) even though we have Neutral recommendations on these stocks. Gilead’s HIV franchise has been helping the company post better-than-expected earnings over the past few quarters and we expect this trend to continue.

Biotech companies that could be acquisition targets provide opportunities for significant returns. Here, we would like to mention two companies that could be potential take-out targets -- Biogen Idec and Acorda Therapeutics (ACOR). In addition to holding a leading position in the multiple sclerosis market, we believe Biogen has the best pipeline in all of biotech and could be an attractive takeover candidate for pharma companies interested in biologics.

Meanwhile, Acorda is one of the more interesting biotechnology companies under our coverage. We have an Outperform rating on the stock. Acorda recently received a favorable recommendation from an FDA advisory panel on its key pipeline drug, Fampridine-SR, which could have blockbuster potential worldwide.

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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5511.

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Headquartered in Minnetonka, Minnesota, American Medical Systems is a world leader in medical devices and procedures used to treat erectile dysfunction and other men's and women's health problems. Other men's health problems include incontinence, benign prostate hyperplasia, and stricture. Women's health problems include menorrhagia (excessive bleeding during menstruation), incontinence, and other pelvic floor defects. The company’s primary competitors include Johnson & Johnson (JNJ) and Boston Scientific Corp. (BSX).

On a business unit basis, apart from Diagnostic, revenues from the other three segments – Cardiovascular, Ophthalmology and Other Markets, recorded a decline in revenues for the fourth quarter. While Diagnostic revenues increased 2% year over year to $4.6 million, revenues for the other three segments declined 12% to $9.8 million, 29% to $1.9 million and 41% to $2.9 million, respectively.

Cardiovascular segment results were impacted by the continuing decline in Cypher sales. SurModics derives a substantial majority of its drug delivery revenue from the Cypher stent, which is marketed by Johnson & Johnson’s (JNJ) Cordis division. However, Cypher faces stiff competition from Boston Scientific Corp.’s (BSX) Taxus drug-eluting stent, and stents from Medtronic (MDT) and Abbott Vascular, a division of Abbott (ABT). Johnson & Johnson reported a 27% year over year decline in Cypher sales which came in at $211 million.

Although the Ophthalmology segment did not perform well this quarter, we expect it to improve based on the company’s recent agreement with Genentech.

Revenues in each of the four business units are derived from three primary sources: royalties and license fees from licensing patented surface modification and drug delivery technologies and in vitro diagnostic formats to customers; the sale of reagent chemicals to licensees of its technologies, stabilization products to the diagnostics industry and coated glass slides to the genomics market; research and development fees generated on customer projects.

For the reported quarter, royalties and license fees accounted for 49% of total revenues with product sales and research and development, accounting for 29% and 22%, respectively. Despite a 15% decline in operating expenses, operating margin declined to 20.7% compared to 22.9% in the fourth quarter of 2008.
 
At the end of the fourth quarter, SurModics had $20.6 million of cash and short term investments, down from $24.6 million at the end of September 2008. During the fiscal year, the company repurchased about $15 million of stock and is left with another $7 million for further repurchases.

Chicago, IL – November 5, 2009 – Zacks Equity Research highlights Novatel Wireless (NVTL) as the Bull of the Day and The Corporate Executive Board (EXBD) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Automatic Data Processing (ADP), Johnson & Johnson (JNJ) and Kraft Foods (KFT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=5506

Here is a synopsis of all five stocks:

Bull of the Day:

We upgrade our recommendation for Novatel Wireless (NVTL) to Outperform following the blockbuster financial results of its third quarter 2009.

We expect the top-line of Novatel to maintain its current growth rate supported by strong demand for MiFi mobile intelligent hotspot and USB modems.

The company has generated a record-high level of free cash flow and significantly improved its gross margin. In addition, the company has a very strong balance sheet, capable to support its long-run business endeavors. Management has made the decision to extend the MiFi platform with new features and functionality, as well as building a MiFi ecosystem through organic development and strategic partners.

Bear of the Day:

We maintain our Underperform rating on shares of The Corporate Executive Board (EXBD). While Q3 EPS beat expectations, the company continues to experience deterioration in key operating metrics, including contract value.

Given the current operating pressures, along with ongoing concerns regarding a slowing economy, we believe the shares should trade at a discount to the peer group average. As such, we anticipate that the company's shares should underperform the market in the near-term.

Latest Posts on the Zacks Analyst Blog:

ADP Sees 203,000 Jobs Lost

Automatic Data Processing’s (ADP) read on manufacturing is in direct contrast with the ISM manufacturing survey which came out on Monday and indicated that manufacturing was actually gaining jobs in October. We will see on Friday which one was right when the Bureau of Labor Statistics (BLS) comes out with the official employment numbers. The consensus for the BLS (which includes government jobs, while ADP does not) report is for a decline of 175,000 jobs. The ADP report might make people a little bit more inclined to take the over on that number, but I don’t think by a lot.

By firm size, it looks like large firms, which tend to have better access to financing, are faring better than their little brothers. They lost a total of 53,000, while medium and small firms each lost 75,000 thousand. Traditionally, small businesses are one of the main engines of job creation in the country. However those numbers are a little bit deceptive since small businesses employ more people overall than do large businesses.

Specifically, there are 17.9 million people working for firms with more than 500 employees, 42.3 million working for firms between 50 and 499 employees and 48.1 million working for firms with fewer than 50 workers. Thus on a percentage basis, large employers dropped 0.3% of their payroll in October, while medium-sized firms dropped 0.18% and small firms dropped less than 0.16%. As evidenced by the announcement yesterday by Johnson & Johnson (JNJ) that it would be trimming back its worldwide workforce by 7%, even the largest, most well-financed and stable of companies have not been immune from layoffs in this cycle.

Kraft Foods Beats, Raises Guidance

Kraft Foods (KFT) reported strong second-quarter results with earnings of 55 cents per share, above the Zacks Consensus Estimate of 48 cents. Quarterly earnings were also up 61.8% year-over-year.

However, net revenues for the quarter declined 5.7% year-over-year to $9.8 billion, primarily due to the unfavorable negative 5.6% impact of foreign currency and a negative 0.6% impact from divestitures. Organic revenues increased 0.5%, driven by a 0.7% gain from volume and mix, which was partially offset by negative 0.2% from pricing.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=5508.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5509.

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Revenues declined to $24.9 million in the reported quarter from $31.6 million in the year ago period. Revenues consist of royalty revenues and collaborative and other research and development revenues. Lower revenues were primarily due to a decrease in collaborative revenues.

Expenses increased mainly due to the increased size of the company’s workforce, increased spending on late-stage clinical programs and increased stock-based compensation expenses. Research and development (R&D) expenses increased to $132.1 million, up from $131.7 million in the year-ago period, mainly due to investments supporting the company’s hepatitis C virus (HCV) and cystic fibrosis development programs and new product development.

Sales, general and administrative (SG&A) expenses for the reported quarter were $36.6 million, compared to $25.4 million for the third quarter of 2008. The significant increase in SG&A spend reflects the company’s investments in support of the potential launch of telaprevir.

The company reiterated its guidance for 2009 year-end cash, cash equivalents and marketable securities of approximately $800 million. Vertex also maintained its guidance for 2009 loss of more than $535 million.

We expect investor focus to remain on the presentation of data on lead pipeline candidate, telaprevir, at the upcoming meeting of the American Association for the Study of Liver Diseases (AASLD). Telaprevir, an oral protease inhibitor, is being developed in collaboration with Johnson & Johnson (JNJ) for the treatment of hepatitis C virus (HCV) infection. The company announced that it is on track to file for approval of telaprevir in the second half of 2010. Vertex is also looking to commence a combination study with telaprevir and another HCV candidate, VX-222, by year end.

Although we believe that telaprevir has blockbuster sales potential, we note that any delay in the development and approval of telaprevir would weigh heavily on the stock. Moreover, the HCV market is highly competitive with several companies like Schering-Plough (SGP), Merck (MRK), and Boehringer Ingelheim working on the development of treatments for HCV. We currently have a neutral recommendation on Vertex.

Earlier, in September, Theravance received FDA approval to market Vibativ for the treatment of complicated skin and skin structure infections (cSSSI) caused by Gram-positive bacteria. While the drug will be marketed and sold by Astellas, Theravance will receive royalties on global sales. In the U.S. , the company will help Astellas in marketing the drug for the first three years post approval.

Apart from cSSSI, Vibativ is also being studied for hospital-acquired pneumonia (HAP). The company has already submitted a New Drug Application (NDA) for this indication and has been assigned a Prescription Drug User Fee Act (PDUFA) date of Nov. 26. We believe a favorable decision from the agency will increase the patient base thereby improving the sales potential of the drug.

Although the Vibativ approval is a major achievement for Theravance, we remain concerned about competition from other drugs targeting Gram-positive bacterial infections. Vibativ will have to jostle for space against products like ViroPharma's (VPHM) Vancocin, Pfizer's (PFE) Zyvox and Tygacil. The drug will also have to fight off competition from pipeline candidates such as Johnson & Johnson's (JNJ) ceftobiprole and Forest Laboratories' (FRX) ceftaroline. We estimate an initial slow sales ramp of Vibativ. We have a Neutral rating on the stock.

Gains in commodity prices helped some mid-session buying in energy and material shares but the overall weakness in financial and healthcare stocks kept sentiment in check.  Shares of UnitedHealth Group Inc. (NYSE:UNH) and Aetna Inc. (NYSE:AET) fell more than 3% as the Senate Finance Committee approved an $829 billion plan to overhaul the U.S. health system.  Johnson & Johnson (NYSE:JNJ) fell 2.4% after the company reported revenue that was below the Street expectations.  However, the company reported higher quarterly earnings, helped by cost-cutting measures and a one-time tax benefit; Johnson &Johnson also raised its full-year guidance.  Nevertheless, shares of the company led the decliners on the DJIA.

The Dow Jones industrial average, which traded 70 points lower in the morning, recovered some ground to close at 9871.06, off 0.2% or 14.74 points, its first decline in four sessions.  The S&P500 retreated 0.3% from a new 2009 high set on Monday.  The tech-heavy NASDAQ, however, finished the day virtually unchanged.  On the NYSE, 1.14 billion shares exchanged hands with decliners ahead of advancing shares by a three-to-two margin.

After Whitney’s downgrade, shares of Goldman Sachs (NYSE:GS) fell 1.5%, with Bank of America (NYSE:BAC) easing 1.2%, and Morgan Stanley (NYSE:MS) down 2.0%.

However, after the close, Intel's (NASDAQ:INTC), a DJIA component, results offered to ease some worries.  The company reported third-quarter earnings of 33 cents a share, versus Zacks estimates of 27 cents a share; the company reported revenues of $9.4 billion that was off 8.1% from last year, but bettered Zacks estimates of $9.0 billion.

CSX (NYSE:CSX), joining Intel (NASDAQ:INTC) in painting an upbeat picture.  The company announced third quarter earnings of 74 cents a share, down from 94 cents a year ago, but above Zacks estimates of 71 cents a share as revenues of $2.36 billion bettered estimates of $2.33 billion.

This morning, however, JP Morgan’s (NYSE:JPM) results showed an upside surprise as losses from the firm’s credit cards and other consumer loans businesses were offset by strong underwriting revenues.  Third quarter results were well ahead of Zacks estimates at 82 cents and were sharply up from last year's 9 cents a share.

The US dollar remained under pressure, falling to a fresh 14-month low yesterday.  Strong demand for $30 billion in 3-month and $30 billion in 6-month notes helped support Treasury prices.  Gold prices jumped $7.50 to $1073 and crude prices hit $74.

Companies reporting their results include: Abbott (NYSE:ABT), WW Grainger (NYSE:GWW), Host Hotels and Resorts (NYSE:HST) and Xilinx (NASDAQ:XLNX).

Chicago, IL – October 14, 2009 – Zacks Equity Research highlights VimpelCom (VIP) as the Bull of the Day and Rite Aid Corporation (RAD) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Johnson & Johnson (JNJ), Elan Pharmaceuticals (ELN) and Gilead Sciences, Inc. (GILD).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We reaffirm our Outperform recommendation for VimpelCom (VIP), Russia's second largest cellular carrier with over 25% market share. Reported earnings in the last quarter outpaced the Zacks Consensus Estimate, driven by foreign exchange gains.

We continue to be intrigued by VimpelCom's successful sales growth trend and its ability to retain subscribers on a recurring basis, even as overall economic factors remain weak. The company is also progressing well in expanding its 3G wireless and residential broadband network deployments, as reflected by healthy subscriber accretion in the last quarter.

Additionally, the ongoing expansion initiatives into emerging Asian markets (including Cambodia and Vietnam) are expected to boost opportunity in wireless, given the lower mobile penetration levels in these regions.

Bear of the Day:

Management at Rite Aid Corporation (RAD) was executing a turnaround strategy centered on increasing the profitability of the existing store base.

However, the acquisition of Brooks Eckerd prior to a convincing turnaround in profitability has increased the debt burden and interest expense.

Moreover, Wal-Mart's foray into the retail generic drug market has pressured the company's pharmacy margin. Given the weakness of front-end sales and management's continual lowering of EPS guidance (for larger net losses), the stock's rating remains Underperform.

Latest Posts on the Zacks Analyst Blog:

J&J Beats & Raises Guidance

Johnson & Johnson’s(JNJ) third quarter earnings of $1.20 surpassed the Zacks Consensus Estimate by 7 cents and by 3 cents from the year-ago period.

However, the company reported revenues of $15.1 billion, a decline of 5.3% compared to the third quarter of 2008. While 2.8% of the decline in revenue was due to operational factors, foreign exchange movement was responsible for the remaining 2.5% decline. Sales in both domestic and international markets recorded declines of 8.1% and 2.5%, respectively.

Johnson & Johnson’s diversified business model is helping the company pave its way through tough situations. For the second quarter in a row, the company’s medical devices segment posted higher revenues than the pharmaceuticals. While medical devices recorded an increase of 2.3% compared to the year-ago period, consumer products and pharmaceuticals recorded a year-over-year decline of 2.7% and 14.1%, respectively.

While generic competition was primarily responsible for the decline in prescription drug business, unfavorable currency movements hampered sales of consumer products and medical devices.

For the pharmaceuticals segment, domestic and international sales declined 19.2% and 7.1%, respectively reflecting an operational decrease of 1.9% and a negative currency impact of 5.2%. Drugs such as Topamax (76% decline), an antiepileptic and a treatment for migraine, and Risperdal (40% decline), an antipsychotic medication, were negatively impacted by generic competition.

The company recently acquired an 18.4% stake in Elan Pharmaceuticals (ELN) for $885 million and an additional $500 million for its Alzheimer's disease pipeline. Additionally, J&J entered into a licensing and collaboration agreement with Gilead Sciences, Inc. (GILD) for the development and commercialization of a new fixed dose combination of investigational compound TMC278 (rilpivirine hydrochloride 25 mg) and Gilead's Truvada (emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg) for treatment-naive adult patients with HIV-1. We believe J&J will look for such opportunities in the near future to boost its pharmaceuticals revenues.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=5508.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5509.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Chicago, IL – October 14, 2009 – 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: American International Group (AIG), Morgan Stanley (MS), Elan Corporation (ELN), Biogen Idec (BIIB) and Johnson & Johnson (JNJ).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

AIG to Sell Taiwan Life Unit

American International Group (AIG) said on Monday that it has decided to sell its stake of almost 98% in Taiwan life insurance unit Nan Shan Life Insurance Co. for about $2.2 billion to a group led by Hong Kong-based investment company Primus Financial Holdings.

The Primus consortium, which includes Hong Kong-listed China Strategic Holdings, will take over Nan Shan Life, Taiwan's largest life insurer by book value. Primus and China Strategic will seek loans from Taiwanese banks to finance the deal.

China Strategic owns an 80% stake in the consortium, while Primus holds the remaining 20%. Following the close of the transaction, Primus consortium will maintain the existing compensation and benefits package for Nan Shan's 4,000 employees for at least two years.

Pending regulatory approval, Blackstone Advisory Partners and Morgan Stanley (MS) acted as AIG’s financial advisers for this deal.

Subpoena for Elan

Elan Corporation (ELN) recently received a subpoena from the US Securities and Exchange Commission (SEC) regarding the company’s disclosure of two brain disorder cases (in July 2008), often fatal, tied to the use of its drug Tysabri for the treatment of multiple sclerosis.

Elan has a marketing agreement with Biogen Idec (BIIB) for Tysabri. In addition, the subpoena asked for detailed information regarding clinical trial data on bapineuzumab, a drug for the treatment of Alzheimer's disease. Recently, Johnson & Johnson (JNJ) paid $885 million for an 18.4% stake in Elan in addition to $500 million for a majority stake in the company’s Alzheimer's disease pipeline.

As a reminder, in July last year, both Elan and Biogen announced the occurrence of two cases of brain infection, progressive multifocal leukoencephalopathy (PML), in patients taking the drug. Meanwhile, 11 such cases have been reported by the companies through July 2009. Since then, the companies stopped informing public about the infection. The drug was withdrawn from US markets in 2005 due to the PML concern but was reintroduced after one year with a strict warning regarding the occurrence of PML.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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• UBS (NYSE:UBS) initiated coverage of VF Corp (NYSE:VFC) with a "buy" rating

• Pier 1 Imports (NYSE:PIR) reported a 9.9% gain in September same-store-sales, versus last year's 11.7% decline. The company expects inventory levels will peak at the end of the quarter at about $350 million

• According to the WSJ, Macau may draft rules within the next two months to impose age and table limits on casinos there

• AIG International (NYSE:AIG) agreed to sell its Taiwan life insurance unit to a Hong Kong investment group for $2.15 billion

The Dow Jones industrial average, which rose as high as 9931.82 points in the morning, gained 20 points to close at 9885.80.  The broad S&P 500 index rose 4.70 points, or 0.44%, to close at 1,076.19 and the tech-heavy Nasdaq ended the day little changed.  Bond markets were closed for the Columbus Day holiday.  On the New York Stock Exchange, 16 stocks were higher in price for every 14 that fell.

Eight of the ten S&P500 sectors finished higher in yesterday's session. Oil and gas shares led the gainers, adding 1.2% following a 2.1% rise in crude prices to $73.55, its highest since August 24.  DJIA components Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) rose 1.3% and 1.2%, respectively.

Meanwhile, equity prices appear to be taking into consideration upside surprises in last quarter's numbers.  The National Association for Business Economics' survey of its members showed majority believed the recovery has begun, but concerns remain over federal debt and rising unemployment.  Nevertheless, the greenback’s decline is expected to help results of multinational firms with significant overseas exposure.

Also, news emerging from the geopolitical front appears to be less motivating as the head of Homeland Security noted Al-Qaeda members likely within US borders and North Korea reportedly shot off five missiles off its east coast; the reports said the country is preparing to fire more.  Although stocks have had their steepest rally in more than 70 years, doubts remain over an exit strategy from simulative policies amid increasing unemployment levels and housing worries.

Black & Decker (NYSE:BDK) jumped 7.6% Monday after the company's raised its third quarter earnings guidance to 91 cents a share from 35- 45 cents a share on better-than-expected sales, operating margins and tax rate. UBS (NYSE:UBS) downgraded SanDisk (NASDAQ:SNDK) shares to "sell" from "neutral," on concerns of peaking chip demand leaving little scope for price increases.  Ford (NYSE:F) shares jumped 7% after the automaker reported that European sales jumped 12% on strong sales of its subcompact models Ka and Fiesta. Google (NASDAQ:GOOG) shares rose 1.5% after Goldman Sachs (NYSE:GS) raised its price and earnings target, saying the firm will benefit from next year's recovery in online activity.

Financial shares continued their upward run, adding 0.7%.  A number of banks report their earnings in the coming sessions, including JP Morgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C).  According to analyst Dick Bove, large-cap banks are expected to perform well, helped by strong trading activity, but Bove noted regional banks could be under pressure due to commercial real estate losses. 

Meanwhile, shares of Deutsche Bank (NYSE:DB) fell 1.6% yesterday after the company’s CEO Ackermann’s comments raised concerns of a capital raising.  This morning influential analyst Meredith Whitney took a cautious stance on Goldman Sachs (NYSE:GS) and lowered her rating on the bank to "neutral" from "buy" with a $186 price target. 

Today's list of releases includes quarterly earnings reports from companies such as Altera (NASDAQ:ALTR), CSX (NYSE:CSX), Intel (NASDAQ:INTC), and Johnson & Johnson (NYSE:JNJ).

The Serum tube contains a gel additive that speeds up the clotting process, thereby enabling the tube to be put in a centrifuge for analysis five minutes after it is filled. On the other hand, standard tubes require 30 minutes of clotting before they are ready for use. 

The new approval would boost demand for Serum tubes that will eventually drive revenues for the BD Diagnostics segment. BD Diagnostics is one of the three Becton’s operating segments that manufacture Serum tubes. Becton’s other two operating segments are: BD Medical and BD Biosciences.

Becton develops, manufactures and markets medical devices, supplies, laboratory equipment and diagnostic products globally. The company is a world leader in safety needle products.

Becton competes with players like Baxter International (BAX), Johnson & Johnson (JNJ) and Abbott Laboratories (ABT), all of which have large resources. However, we believe that the company’s sound business model and product line should weather the current economic turbulence, and would be able to withstanding competitive pressure. Based on the company’s performance in the fiscal third quarter, we have a Neutral recommendation on Becton stock.

• Barclays (NYSE:BCS) reported plans to spin off a $6.35 billion portfolio of complex credit assets as it seeks to clean up its balance sheet

• Phillips Electronics (NYSE:PHG) reported better-than-expected third quarter earnings, helped by cost-cutting measures, although the company said most markets are yet to see recovery

• Deutsche Bank (NYSE:DB) lifted Johnson & Johnson's (NYSE:JNJ) price target to $67 from $63 and maintained its "buy" rating on the stock, as the analyst noted "Ahead of Tuesdays earnings call we are raising our price target to $67 (prior $63) based on improving comparable multiples, new product approvals, stabilization in the global economy, and FX tailwinds all [of] which should add to earnings in 4Q and next year. We expect management will focus on continued healthy trends in its Medical Device & Diagnostic division, which will be the highlight of Tuesday's earnings meeting"

• Goldman Sachs' (NYSE:GS) removed Johnson Controls (NYSE:JCI) from its Conviction Sell list in anticipation of optimism after its October 13 analyst day.  Goldman raised its price target on the firm to $20 from $18

After a two-week selloff, fueled in part by concerns that the seven-month old rally had gotten ahead of any economic recovery, stocks got a boost last week following better-than-estimated economic numbers and Alcoa’s (NYSE:AA) surprise quarterly profit.  That helped investors set aside worries and extend the rally.  Meanwhile, White House economic adviser Lawrence Summers reiterated the Obama administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

This morning’s stock futures show markets are headed for a higher opening as the busy week of earnings commences. Ahead of the market's open, Dow Jones industrial average futures are up 59 points, or 0.6%, to 9,866.  Standard & Poor's 500 index futures gained 7.30 points, or 0.7%, to 1,075.40, while Nasdaq 100 index futures rose 11 points, or 0.6%, to 1,736.50.

On Friday, the Dow Jones industrial average rose 78 points, or 0.8%, to 9,864.94 -- its highest closing level in a year.  The S&P 500 index gained 6 points, or 0.6%, to 1,071.49 and the Nasdaq climbed 15 points, or 0.7%, to 2,139.28.  On the New York Stock Exchange, advancing issues beat those that declined in price by a three-to-two margin.  For the week, the DJIA rose 4% and the S&P 500 index gained 4.5% - their best performance since July.  The Nasdaq advanced 4.5% during the week.

Last week's rally saw all but one of the S&P500 industry sector recording gains.  Only telecommunications shares failed to advance, and fell 5.9%, following AT&T's (NYSE:T) announcement that it plans to allow internet-based phone calls on phones including Apple's (NASDAQ:AAPL) iPhones.  The gains last week were led by basic materials (+8.4%), oil and gas (+7.6%), financials (+6.3%), industrials (+5.0%), tech (+4.9%), consumer services (+4.5%), consumer goods as well as utilities (+2.9%), and health care (+2.7%).  Financials rose after a Goldman Sachs (NYSE:GS) report recommended large-cap banks. Gains in industrial shares were helped by last week’s fall in dollar and Caterpillar's (NYSE:CAT) announcement that it plans to hike prices globally in 2010.  Retail shares rose after firms reported better-than-expected comparable monthly sales numbers.

This week sees the release of the first big batch of third-quarter earnings.  Companies reporting their numbers include Johnson & Johnson (NYSE:JNJ), Intel (NASDAQ:INTC), JP Morgan (NYSE:JPM), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Nokia (NYSE:NOK), Google (NASDAQ:GOOG), IBM (NYSE:IBM), Bank of America (NYSE:BAC), and General Electric (NYSE:GE).

On Thursday, the European Central Bank and Bank of England left interest rates unchanged.  Sentiment also received a boost from domestic corporate borrowing, which rose for the eight straight week. 

The growing optimism surrounding consumer spending, which is crucial for an economic recovery, followed late Wednesday's good results from Alcoa.  The company surprised investors with its first profit in nine months, which the aluminum company attributed to cost-cutting and rising sales to automakers.  Analysts believe that it will take more than just cost cutting to impress investors this earnings season.  

Meanwhile, a better reading on the job market also fueled investors' optimism.  The Labor Department reported that new claims for jobless benefits fell to 521,000 last week from 554,000 during the previous week.  Claims came to the lowest level since early January.

The Dow rose 61.29, or 0.6%, to 9,786.87. The index ended off its highest level after demand at a government auction of 30-year bonds fell short of expectations.  The Standard & Poor's 500 index rose 7.90, or 0.8%, to 1,065.48, while the Nasdaq composite index rose 13.60, or 0.6%, to 2,123.93.  About three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 5.2 billion shares, compared with 5.1 billion on Wednesday.  The market's measure of investor worries, the CBOE Vix, dropped 2% to 24.18.

The Dollar Index, which tracks the US currency against a basket of currencies, dropped 0.7% to 75.968 after reaching 75.767, its weakest level since August 2008.  This morning, however, the dollar rebounded from its lows after Fed Chairman Bernanke seemed to signal a shortening of its accommodative policy timeline.  Economists currently do not expect policy shifts before mid-2010; however, Bernanke advised the Fed is ready to tighten monetary policy once the economy improves.  At the same time, he cautioned that "accommodative policy will likely be warranted for an extended period."  Gold closed at a record $1,056.30 an ounce and hit an electronic trading high of $1,062.70 during the day.

A weak dollar, along with rising oil and gold prices, gave a boost to dollar-sensitive multi-nationals, such as Dow components 3M (MMM), GE (GE) and Johnson & Johnson (JNJ). The rise in oil prices lifted Chevron (CVX), Exxon Mobil (XOM) and other commodity names. 

The House is considering an extension of the first-time homebuyers' tax credit, slated for November expiration. Pulte Homes (NYSE:PHM) shares climbed 4.3%; DR Horton (NYSE:DHI) increased 8.0%; and Lennar (NYSE:LEN) rose 9.1%.

Among retailers, Macy's (NYSE:M) increased 5.1% after reporting a 2.3% sales drop, half the projected decline. Abercrombie & Fitch (NYSE:ANF) rose 5.2% after its sales decline proved less than feared.  Luxury retailer Saks (NYSE:SKS) fell 4.5% following its reported 11.6% decline in comparable sales.

The clinical studies were concentrated on three products – the MiniArc Single-Incision Sling System for treating female SUI, the Elevate Prolapse Repair System and the Perigee Prolapse Repair System. Results for each of these studies are presented here:

• Six-month prospective evaluation of the MiniArc Single-Incision Sling System – The device delivered 91% success rate with the preliminary results pointing towards minimal estimated blood loss, minimal length of hospital stay and short operative times. American Medical Systems will continue evaluating results for up to twenty-four months.
• Six-month prospective evaluation of the Elevate Prolapse Repair System – The device demonstrated efficiency of 94.5% in posterior treatment and a 95.1% efficiency in apical treatment. The trial evaluated 139 patients with Stage II or greater prolapse at 16 U.S. and European sites.    
• Twenty-four month study of the Perigee Prolapse Repair System – The device produced 88.5% success rate in 114 patients implanted with the system. This was a single-arm, prospective study conducted across 8 U.S. sites.

The company competes with Johnson & Johnson (JNJ) and Boston Scientific Corporation (BSX).

The payment will be made to Johnson & Johnson's subsidiary, Cordis Corporation. Boston will report a substantial portion of the payment as a special item in the fourth quarter of 2009.

Boston is a market leader in the stent market. A stent is a metal tube used in surgical operations to open-up blocked arteries. Some of these fourteen settled lawsuits are related to Boston's famous Palmaz-NIR suit, particularly the NIR suit.

We think that despite the huge settlement charges Boston will benefit from settling these long-pending litigations, which had created an overhang on the company's operations. Furthermore, the company has already hedged itself against such expenses by creating a legal reserve. Boston reported revenues of $2,074 million in the second quarter of 2009, an increase of roughly 2% year over year.

Boston Scientific is a manufacturer of medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson, Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ). Based on the company's performance, we have assigned a Neutral recommendation to the stock.

The payment will be made to Johnson & Johnson's subsidiary, Cordis Corporation. Boston will report a substantial portion of the payment as a special item in the fourth quarter of 2009.

Boston is a market leader in the stent market. A stent is a metal tube used in surgical operations to open-up blocked arteries. Some of these fourteen settled lawsuits are related to Boston's famous Palmaz-NIR suit, particularly the NIR suit.

We think that despite the huge settlement charges Boston will benefit from settling these long-pending litigations, which had created an overhang on the company's operations. Furthermore, the company has already hedged itself against such expenses by creating a legal reserve. Boston reported revenues of $2,074 million in the second quarter of 2009, an increase of roughly 2% year over year.

Boston Scientific is a manufacturer of medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson, Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ). Based on the company's performance, we have assigned a Neutral recommendation to the stock.

The Dow Jones industrial average jumped 124 points, or 1.3% and the broader S&P 500 index rallied 19 points, or 1.8% and the Nasdaq composite index advanced 40 points, or 1.9%.  The share gains were broad based with 28 of the 30 Dow components advancing.  On the New York Stock Exchange, four stocks rose for each one that declined in price.  Only 978 million shares exchanged hands on the NYSE.  Trading was light due to the Jewish holiday of Yom Kippur.     

In a spate of big corporate merger announcements, Abbott Labs (NYSE:ABT) said it will pay $6.5 billion for Solvay's pharmaceutical business, and Xerox (NYSE:XRX) offered to pay $6.4 billion in cash and stock for Affiliated Computer Services (NYSE:ACS).  Johnson & Johnson (NYSE:JNJ) said it will pay $444 million for an 18% stake in Crucell (NASDAQ:CRXL).  The announcements signaled corporations’ belief that equity markets still offer values, while economic conditions support a growth environment for purchases made.

The financial, basic materials, and oil & gas sectors were among the leading gainers yesterday.  Even as stock prices rose, Treasuries advanced and the corresponding yields fell, with the yield on the 10-year notes declining to 3.28% from 3.32%.

Yesterday's strength was broad-based with 28 of the DJIA's 30 components moving higher, and all ten S&P 500 industry sectors marking gains.  Financials (+3.4%) were the leading gainers, with American Express (NYSE:AXP) up 4.1% and Bank of America (NYSE:BAC) rising 3.7%.  Morgan Stanley (NYSE:MS) said it expects banks' credit losses to decline over the next 12-18 months, and noted large-cap banks are "largely done with capital repair."

Analyst upgrades also helped much of the rally yesterday, with Citigroup (NYSE:C) shares jumping 4.3% on an analyst upgrade. Cisco (NASDAQ:CSCO) rallied 4.4% after Barclays' (NYSE:BCS) upgraded the stock to "overweight" from "equal weight," citing prospects in Europe and momentum in the US. Applied Materials (NASDAQ:AMAT) jumped 3% on a Citigroup (NYSE:C) upgrade to "buy" on opportunities in its solar-power operations.  However, MEMC Electronic Materials (NYSE:WFR) shed 3.1% after Citigroup (NYSE:C) cut its rating to "hold" from "buy", noting recent poly production problems remain unresolved.

It started when Elan signed a deal with Johnson & Johnson (JNJ) last July. But now, the two companies have amended this deal to drop the terms involving Tysabri.

J&J will now pay $885 million, down from the previously-announced $1 billion, for an 18.4% stake in Elan. However, J&J's $500 million investment for a majority stake in the Alzheimer's disease pipeline remains unchanged. Although Elan claimed that the new terms will restore its 'unintended breach' of contract with Biogen Idec related to Tysabri rights, we are yet to know whether its US partner has accepted this argument.

Biogen and Elan have a 50-50 partnership deal for Tysabri under which each has rights to acquire full control of the drug if there is any change in ownership at either company. Though neither is allowed to sell this right to a third party without consent of the other, Biogen claimed that Elan had violated this clause while tying up with J&J.

In its original deal with J&J, Elan had reportedly given the company an option to acquire its 50% stake in Tysabri in case of a change in ownership at Biogen. Biogen thus went to court to defend its Tysabri rights.

Earlier this month, a court ruled that although Elan's deal did not result in an assignment of rights to J&J, it did involve a breach of the company's contract with Biogen for Tysabri. Elan was given 23 days to correct the breach or lose its rights to the drug.

Failing this favorable ruling, Biogen would have been in a tight spot. Elan would have enjoyed a key role in any takeover deal involving Biogen as any interested buyer would have to discuss the Tysabri rights with Elan.

In our opinion, Biogen has the best pipeline in all of biotech and could be an attractive takeover candidate for pharma companies interested in biologics. We have a Neutral rating on the stock.

• Johnson & Johnson (NYSE:JNJ) said they have purchased 18.1% of Crucell (NASDAQ:CRXL) for $440 million, a 30% premium to Friday's close.

• Kraft Foods (NYSE:KFT) is likely to launch a hostile bid for Cadbury (NYSE:CBY), in a deal worth $17.6 billion, as the London Observer noted.

• Toyota Motor (NYSE:TM) increased its global sales projection for 2009 by 3% to 6.7 million cars.

Investors can find such funds by checking out the entire list of the Zacks #1 Rank Income Equity Funds.

3 Solid Samples

Parnassus Equity Income (PRBLX) was incepted in September 1992. The investment seeks current income and capital appreciation.

The fund invests primarily in a diversified portfolio of equity securities which include common and preferred stock as well as convertible bonds. As of March 2009, its portfolio turnover was 70.20%.

Shareholders have to make a minimum initial investment of $2,000 to enter this Zacks#1 Rank (“Strong Buy") fund. It has topped the total returns of its benchmark index in the last 1-, 3- and 5-year periods.

Federated Equity Income A (LEIFX) seeks above-average income and capital appreciation. The fund focuses on stocks of companies that have the potential to pay high, growing dividends.

The fund ordinarily selects securities that have a comparatively low volatility in share price relative to the overall equity market, but may also invest in companies that offer superior growth prospects.

AT&T Inc. (T), Johnson & Johnson (JNJ) and Wyeth (WYE) are among the fund’s key holdings.

FAM Equity-Income (FAMEX) seeks current income as well as long-term capital appreciation. The fund mainly invests in income-producing stocks that pay dividends.

This open-end, no-load mutual fund pays dividends on a quarterly basis. Capital gains, if any, are distributed in December.

Paul Hogan has managed the fund since its inception in April 1996. It has an expense ratio of 1.40%.

Discover Many More Funds

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our new mutual funds section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward.

Results showed that clinical advantages associated with the use of XIENCE V continued to increase compared to Boston Scientific's (BSX) Taxus Express2 Paclitaxel-Eluting Coronary Stent System.

At three years, XIENCE V demonstrated a reduction in the risk of major adverse cardiac events (9.1% for XIENCE V compared to 15.7% for Taxus). XIENCE V also demonstrated a reduction in the risk of Target Lesion Failure (8.3% for XIENCE V versus 14.4% for Taxus), a reduction in the risk of Target Vessel Failure (13.5% for XIENCE V compared to 19.2% for Taxus) and a reduction in the risk of heart attacks (3.7% for XIENCE V compared to 6.3% for Taxus).

These results were presented at the 2009 Transcatheter Cardiovascular Therapeutics (TCT) conference in San Francisco. The new data should support further uptake of the product, which has helped Abbott become a major player in the drug-eluting stent (DES) market.

XIENCE V has been taking significant domestic and international share from Taxus, Medtronic's (MDT) Endeavor, and Johnson & Johnson's (JNJ) Cypher (sirolimus-eluting system) drug-eluting stents.

Abbott is currently working on a next-generation drug-coated stent called XIENCE PRIME. PRIME is already available in Europe and other countries throughout Asia-Pacific and Latin America, and is currently in a large scale clinical program called SPIRIT PRIME in the U.S. If approved, PRIME could hit the U.S. market in the first half of 2012.

Abbott's Vascular Products segment should continue posting robust growth mainly due to the strong performance of XIENCE V. We have a Neutral rating on Abbott.

The long-term (5-year) financial objectives are as follows:

• Increase sales roughly 7% to 8% per annum, excluding foreign exchange translation effect
• Grow earnings per share in the range of 11% to 13% per annum
• Generate annual cash flow of approximately $4 billion by 2014

We are confident that Baxter will be able to deliver on its commitments. The company has achieved record sales, earnings and strong cash flows over the past few years. Baxter has initiated 14 phase III clinical trials in the last year and is conducting several early-stage trials that have the potential to increase efficiency in the treatment of several chronic diseases like cardiovascular, kidney failure, Alzheimer's, etc.  

Baxter is a leading global medical products and services company that develops, manufactures and markets products to save the lives of millions of people affected by hemophilia, kidney disease, infectious diseases, etc. Baxter’s life-sustaining product portfolio is a hedge against the current economic turmoil. The company’s main competitors include Becton, Dickinson and Co. (BDX) and Johnson & Johnson (JNJ).  

• Best Buy (NYSE:BBY) projects comparable sales for the year will be flat to off 2%, up from its earlier projected drop of up to 5%.  The firm raised its full-year guidance to $2.70 to $3.00 from $2.50 to $2.90, based on "increased optimism" for its second half

• EBay (NASDAQ:EBAY) shares rose 1.3% on an upgrade from Piper Jaffray

• Yahoo (NASDAQ:YHOO) shares gained 5.4% after Sanford Bernstein upgraded the shares to "outperform"

• Johnson & Johnson (NYSE:JNJ) lowered its bid for an 18.4% stake in Elan by $115 million to $885 million

• Kraft (NYSE:KFT) advised of plans to enter talks with Cadbury, and said the company does not need to sell operations to afford its $16 billion bid

• Citigroup (NYSE:C) sold $5 billion in 2- and 3-year bonds backed by the government, leading many to question the firm's ability to reduce the US' 34% ownership any time soon
• Rogers Corp (NYSE:ROG) raised its third quarter outlook

Vibativ, jointly developed with Japan’s Astellas Pharma, is expected to hit the US market by end of this year. While the drug will be marketed and sold by Astellas, Theravance will receive royalties on global sales. In the U.S., the company will help Astellas in marketing the drug for the first three years post approval.

Apart from cSSSI, Vibativ is also being studied for hospital-acquired pneumonia (HAP). The company has already submitted a New Drug Application (NDA) for this indication and has been assigned a Prescription Drug User Fee Act (PDUFA) date of Nov. 26.

The approval for the cSSSI indication comes after a series of delays and a long waiting period since Theravance submitted the NDA in December 2006. Despite receiving an approvable letter from the FDA in October 2007 and a favorable recommendation from the FDA advisory panel in November 2008, the final approval for the drug came after nearly three years.

Last February, the company received a complete response letter from the FDA seeking detailed information related to the treatment of cSSSI. The letter called for Risk Evaluation and Mitigation Strategy data on patients with certain renal risk factors from the cSSSI and HAP studies, revision to the draft label and a customary safety update. Theravance submitted its response in March, which the FDA subsequently accepted in April and set Sept. 16 as the PDUFA date.

Although this approval is a major achievement for Theravance, we remain concerned about competition from other drugs targeting Gram-positive bacterial infections. Vibativ will have to jostle for space against products like ViroPharma's (VPHM) Vancocin, Cubist Pharmaceutical's (CBST) Cubicin, Pfizer's (PFE) Zyvox and Wyeth's (WYE) Tygacil. The drug will also have to fight off competition from pipeline candidates such as Johnson & Johnson's (JNJ) ceftobiprole and Forest Laboratories' (FRX) ceftaroline. We estimate an initial slow sales ramp of Vibativ.

However, it was almost all because of higher energy costs. Core (ex food and energy) inflation was just 0.2% (just a notch higher than the 0.1% expected), following a 0.1% decline in July and a 0.5% increase in June. Energy prices rose 8.0% following a 2.4% decline in July and a 6.6% increase in June.

On a year-over-year basis, producer prices were 4.3% lower, but in July they were 6.8% lower. Core producer prices are up 2.8% on a year-over-year basis. The year-over-year numbers are going to start looking much hotter in the future, as most of the really big declines were in the fall of last year, especially in the fourth quarter.

Looking further up the pipeline at the earlier stages of production, the monthly numbers are starting to have a distinctly warm feeling to them. Intermediate goods saw a 1.8% increase in August, following a 0.2% decline in July and a 1.9% rise in June. On a year-over-year basis, they are still ice cold, with a decline of 12.3% in August vs. a 15.1% decline in July. However, that is a reflection of massive declines in the fourth quarter of last year, when each month saw a decline of more than 4%, for a cumulated quarterly decline of 12.5%. As those numbers roll off, the year-over-year numbers are going to start looking much hotter.

Things are even more extreme at the crude stage. Crude goods are essentially commodities, and thus tend to have much larger price swings than do intermediate or finished goods. Crude goods prices have been seesawing, with a 3.8% monthly gain in August after a 4.5% decline in July and a 4.6% increase in June. On a year-over-year basis, prices on crude goods are still down 35.2%, but just last month they were down 44.8%. The collapse in crude goods prices last fall was absolutely spectacular. In October of last year, crude goods prices crashed by 16.1% and then in November the carnage continued with a 13.1% decline. As those roll off the year-over-year numbers, it could start to look on the hot side.

Looking with a finer-toothed comb at where finished goods prices are rising and falling the most on a year-over-year basis, we see that pharmaceuticals are once again rising in price far in excess of other prices, up 7.2%. Those numbers include both prescription and over-the-counter medications.

Firms like Johnson & Johnson (JNJ) and Bristol Myers (BMY) are going to have an easier time maintaining their margins than are most companies.

Prices for many other non-durable items have also been increasing. For example, the cost of detergents is up 6.0% year over year while sanitary paper products (toilet paper, paper towels) is up 3.7% year over year. That is good news for the likes of Proctor and Gamble (PG) and Colgate Palmolive (CL).

On the downside, the biggest declines by far come from the energy area. This will be very helpful to consumers this winter, as the cost of heating your home is going to be much lower than last year. The price of residential natural gas is down 27.5% from a year ago. If you heat your house with oil instead of gas, you are even luckier; the price of home heating oil is down 47.6%. That should free up some cash for people to either restore their personal balance sheets or purchase other stuff.

The randomized, double-blind trial compared ceftaroline with ceftriaxone in hospitalized adult patients with moderate to severe CAP. Following both the trials, it was found that patients treated with ceftaroline demonstrated a better cure rate (84.3%) compared to those treated with ceftriaxone (77.7%). In addition, the overall microbiological response rate in the microbiologically evaluable (ME) population was 87% for ceftaroline and 81% for ceftriaxone, while in the microbiological modified intent-to-treat (MITT) population it was 84.8% for ceftaroline and 80.4% for ceftriaxone. 

Based on the positive result, Forest expects to file a New Drug Application (NDA) with the US Food and Drug Administration (FDA) for ceftaroline for the treatment of both cSSSI and CAP by year end.

Earlier, in August, Forest entered into a deal with AstraZeneca (AZN) for ceftaroline. The contract involves co-development and commercialization of the drug in all markets other than the U.S. , Canada and Japan . We believe the deal to be quite beneficial for Forest as the company will receive substantial funds from its partner through signing fee, royalties from sales and payments tied to certain specific sales milestones.

On approval, ceftaroline will have to face tough competition from several players especially from Pfizer’s (PFE) Zyvox and Wyeth’s (WYE) Tygacil. The latest drug to get FDA approval for the treatment of infection caused by gram-positive bacteria is Theravance’s (THRX) Vibativ. There are many pipeline candidates as well, including Johnson & Johnson’s (JNJ) ceftobiprole.

We are concerned about longer-term growth of Forest, especially towards the beginning of the next decade when Lexapro, which accounts for over half of the company’s top line, gets exposed to generic competition. That puts a lot of pressure on the pipeline to come through.

• According to the WSJ, China's sovereign wealth fund is in talks to acquire a minority share of AES Corp (NYSE:AES)

• Johnson & Johnson (NYSE:JNJ) is reportedly in talks to lower the price tag of its $1.5 billion Elan (NYSE:ELN) bid

• Salix Pharmaceuticals (NASDAQ:SLXP) reported the successful outcome of two late-stage trials of the efficacy and safety of its rifaximin drug in relieving irritable bowel syndrome symptoms

• Bank of America (NYSE:BAC) lowered its rating on Campbell Soup (NYSE:CPB) to "neutral"

• UBS (NYSE:UBS) upgraded Motorola (NYSE:MOT) to "buy"

The amendment pertains to the coupon rate that was increased 25 basis points to 4.00%. The exchange offer will close on Sep 16, 2009 at midnight. All other terms and conditions for the exchange offer remain unchanged.

The exchange offer calls for exchange of each $1,000 principal amount of its new 3.75%, now 4.00%, Convertible Senior Subordinate Notes due 2041, for each $1,000 principal amount of its 2036 Notes. The 2041 Notes will be converted into cash or shares of the company's common stock at the same conversion rate and price as the 2036 Notes.

The terms and conditions of the exchange offer suggest that holders of 2041 Notes will have the right to compel the company to repurchase their notes at par on Sep 15, 2016, as opposed to Jul 1, 2013 in case of 2036 Notes.

We think that the delay of more than three years will enable the company to defer its debt repayment.

Headquartered in Minnetonka, Minnesota, American Medical Systems is a world leader in medical devices and procedures used to treat erectile dysfunction and other men's and women's health problems. Other men's health problems include incontinence, benign prostate hyperplasia, and stricture. Women's health problems include menorrhagia (excessive bleeding during menstruation), incontinence, and other pelvic floor defects.

The company competes with Johnson & Johnson (JNJ) and Boston Scientific Corporation (BSX).

The composite safety endpoint consisting of different parameters like all-cause death, stroke, and myocardial infarction (MI) demonstrated no significant difference between PCI and CABG. 

Results in the SYNTAX study were as follows:  

• The combined rate of all-cause death, stroke and MI was 10.8% for PCI, compared to 9.6% for CABG.
• On an individual parameter basis, the rate of stroke was 1.4% for PCI, compared to 2.8% for CABG. MI was 5.9% for PCI and 3.3% for CABG. All-cause death was 6.2% for PCI versus 4.9% for CABG.

Boston Scientific manufactures medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ).

Based on the company’s performance, we have assigned a Neutral recommendation to the stock.

• Citigroup (NYSE:C) analysts lowered their rating on Abercrombie and Fitch (NYSE:ANF) to "sell" from "hold" and cut the price target to $24 from $33

• Costco (NASDAQ:COST) received an upgrade from JP Morgan (NYSE:JPM)

• H&R Block (NYSE:HRB) reported fiscal first quarter loss from continuing operations of 39 cents a share, a bit worse than the Zacks expectations of a 37 cent loss, as revenues grew 1.3% to $275.5 million, off estimates of $281 million. The firm, however, maintained full year projections of $1.60-$1.80

• Cooper Companies (NYSE:COO) reported third quarter earnings of 54 cents a share ex-items, missing Zacks estimates of 62 cents a share, but up from last year's 39 cents, as sales gained to $285 million, though slightly off estimates of $287 million

• S&P upped ratings on Constellation Brands (NYSE:STZ) too BB from BB-, with outlook positive

• Collective Brands (NYSE:PSS) reported a fiscal second quarter earnings miss, with results of 29 cents a share, in line with Zacks projections, as revenues fell 8.3% to $836.3 million, missing estimates of $850 million

• FBR Capital raised its target for WW Grainger (NYSE:GWW) to $104 from $93, reiterating its "outperform" expectations

• Elan (NYSE:ELN) faced a Federal court ruling that its Johnson & Johnson (NYSE:JNJ) deal for multiple sclerosis drug Tysabri violates a joint marketing deal with Biogen Idec (NASDAQ:BIIB)

Chicago, IL – September 3, 2009 – 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: Boston Scientific (BSX), Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ).

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Here are highlights from Wednesday’s Analyst Blog:

Looks Like Boston Scientific MADIT

We think that the positive test results will boost demand for Boston Scientific’s (BSX) CRT-Ds, which will essentially drive the company’s top-line. Boston Scientific reported fiscal second quarter results with the cardiac rhythm management (CRM) segment, registering revenue growth of 5% year over year. Within the CRM segment, ICD sales increased roughly 8% year over year to $454 million in the quarter. 


Boston Scientific is a manufacturer of medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ). Based on the company’s performance, we have assigned a Neutral recommendation on the stock.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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MADIT-CRT is the world’s largest randomized NYHA Class I/II CRT-D trial, engulfing more than 1,800 asymptomatic or mildly symptomatic patients across 110 centers in 14 countries.

It is estimated that roughly 22 million people in the world suffer from some form of heart failure, with more than 5.5 million of them being Americans. Class I or II accounted for approximately 70% of all heart failure patients in the U.S. Patients are classified as Class I-II-III-IV by the New York Heart Association based on the degree of symptoms or functional limits, from asymptomatic to bed ridden. 

Major findings in the study were as follows:  

•   The primary endpoint demonstrated that Boston Scientific’s CRT-Ds resulted in a 34% reduction in the risk of first heart failure in asymptomatic and mild (NYHA Class I and II) heart failure patients, compared to standard ICDs.
•   CRT-D therapy reduced the risk of heart failure by 41% compared to ICDs.
•   CRT-Ds provided substantial improvements in Left Ventricular Ejection Fraction (LVEF), a measurement of how well the heart is pumping. Patients treated with CRT-Ds demonstrated an 11% improvement in LVEF after a year, compared to a 3% improvement in ICDs.  


Boston Scientific is a manufacturer of medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ). Based on the company’s performance, we have assigned a Neutral recommendation on the stock.

Chicago, IL – September 2, 2009 – 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: International Paper (IP), Mead Westvaco (MWW), Johnson & Johnson (JNJ), Abbott (ABT) and Medtronic (MDT).

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Here are highlights from Tuesday’s Analyst Blog:

PMI Shows Expansion

As recently as May, the employment reading was down at 34.3. Yes, the current reading means that we are still losing manufacturing jobs, but at a vastly slower pace than we were just a few months ago. With new orders and production leaping upwards, the first effect is likely to be a big increase in margins, due to an increase in productivity.

The next effect will be that the hours for current workers will increase, including some overtime. Calling in laid off workers is likely the next step, and then, probably several months down the road, hiring of completely new workers. The report would seem to indicate that profits in the industrial sector will be better than expected in the third quarter.

The indexes of inventories continued to show contraction. The index of companies own inventories rose slightly to 34.4 from 33.5, but is still well below the 50 mark. The index of customers inventories is higher, but falling at 39.0 vs. 42.5 last month. Both indexes are indicating inventories are being drawn down. While that's not good for the current readings, it sets the stage for more expansion in the future.

One industry that seems to stand out when going through the report is paper, which improved in almost all of the categories. Firms like International Paper (IP) and Mead Westvaco (MWW) have been seeing very large increases in their mean estimates for both this year and next, meaning that the companies are probably conveying positive news to the analysts that this report seems to confirm.

J&J's Cypress Enrollment Begins

Yesterday, Johnson & Johnson (JNJ) announced the initiation of enrollment in the Cypress study (CYPherR for Evaluating Sustained Safety), which is designed to assess clinical outcomes in a wide range of patients suffering from coronary artery disease and taking dual anti-platelet therapy after receiving a Cypher Sirolimus-eluting Coronary Stent. The study, which will enroll approximately 2,000 patients, will be conducted at 200 centers throughout the U.S.

Cypress will provide data for the clinical evaluation of the company’s new NEVO Sirolimus-eluting Coronary Stent in the NEVO III trial. NEVO III is a single-arm trial which is expected to serve as the pivotal trial for the pre-market application (PMA) submission in the U.S. NEVO III will be conducted with approximately 1,200 patients in the United States and Canada.

The Cypress trial is divided into two phases. In Phase I, patients will receive the Cypher Stent coupled with 12 months of dual antiplatelet therapy with a thienopyridine -- clopidogrel or prasugrel -- and aspirin.

Patients treated with 12 months of dual antiplatelet therapy in the earlier phase and who remained free from heart attack, stroke, the need for another procedure (revascularization), stent thrombosis and major bleeding, will be eligible to participate in the second phase of the study. Patients will be randomized to receive either placebo or an additional 18-months of thienopyridine therapy. All subjects will continue the aspirin therapy.

The company’s Cordis division is the manufacturer of the Cypher sirolimus drug-eluting stent. In recent quarters, ex-U.S. market share has been declining due to the introduction of competing products by Abbott (ABT) and Medtronic (MDT).

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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The company is seeking to get Clolar approved for the treatment of previously untreated adults aged 60 or older with acute myeloid leukemia (AML) who have at least one unfavorable prognostic risk factor. The company is seeking approval on the basis of a phase II study in which Clolar was evaluated in elderly patients with previously untreated AML and at least one other factor that gave them a poor prognosis. The study did not include any comparison with a placebo.

Clolar is currently approved for pediatric acute lymphoblastic leukemia (ALL) patients who have relapsed or refractory disease after at least two prior regimens. The new indication would expand the patient base significantly for Clolar. According to the American Cancer Society, approximately 12,810 people will be diagnosed with AML in the United States in 2009 and about 70% of these patients will die from the disease.

At the upcoming meeting, the Committee will decide whether another study will be needed to approve Clolar for the expanded indication. The Committee will also evaluate whether the patients studied by Genzyme were not suitable for chemotherapy.

We believe the committee will ask the company to conduct a randomized study in order to gain approval for the expanded indication. We note that Johnson & Johnson’s (JNJ) cancer drug, Zarnestra, met a similar fate in 2005 when the FDA's oncology committee voted against approving the drug based on data from a single-arm phase II study.  

In fact, in 2007, the agency had recommended that Genzyme should conduct a randomized controlled study in which patients receiving Clolar would be compared with patients receiving placebo.

Meanwhile, the FDA action date for Clolar has been pushed back to December. A delay in Clolar’s approval would be a setback for the company, which is already facing problems due to contamination issues at its Allston manufacturing plant. We have an Underperform rating on Genzyme.

Chicago, IL – August 28, 2009 – 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: Alkermes, Inc. (ALKS), Johnson & Johnson (JNJ), AstraZeneca (AZN), Eli Lilly (LLY) and Pfizer (PFE).

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Here are highlights from Thursday’s Analyst Blog:

Setback for Alkermes’ Pipeline

On Wednesday, Alkermes, Inc. (ALKS) disclosed that it has received notification from Johnson & Johnson’s (JNJ) Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutical International stating that Janssen does not intend to continue with the development of the four-week long-acting injectable formulation of risperidone. A phase I study with the four-week formulation had been initiated in January 2009.

Risperidone, which is marketed as Risperdal Consta, is Alkermes’ lead product. Risperdal Consta is the longer-lasting injectable version of Johnson & Johnson's schizophrenia drug Risperdal (risperidone).

Risperdal Consta uses Alkermes' proprietary Medisorb technology to deliver and maintain therapeutic medication levels in the body through just one injection every two weeks. The product is approved in more than 85 countries worldwide and is available in 60 countries.

Risperdal Consta is superior to the first-generation Risperdal in terms of efficacy, tolerability and frequency of dosage (one injection every two weeks). Given its improved profile, Risperdal Consta is a major player in the schizophrenia market. Worldwide sales of Risperdal Consta came in at $348 million in the first quarter of fiscal 2010.

Risperdal Consta is the current growth driver of Alkermes’ top-line, and the company was looking to drive growth further through the development and approval of the once-monthly formulation. As such, J&J’s decision to discontinue development of the once-monthly injection is a major disappointment for Alkermes.

Although the schizophrenia market is huge, it is also highly competitive, with players like AstraZeneca (AZN), Eli Lilly (LLY) and Pfizer (PFE) fighting for market share.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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The study, referred to as the Trial to Reduce Cardiovascular Endpoints with Aranesp Therapy (TREAT), had two primary endpoints. The first evaluated time to all-cause mortality or cardiovascular morbidity including heart attack, congestive heart failure, hospitalization for angina, or stroke. The second primary endpoint evaluated time to all-cause mortality or chronic dialysis.

Aranesp could not show statistically significant improvement in either. While a higher number of strokes were observed in the Aranesp-treated group compared to the placebo arm, we note that drug’s label already carries a warning regarding the stroke events.

Full efficacy and safety analyses are yet to take place. Amgen will present full results at an upcoming medical meeting later this year.

Aranesp is currently used for the treatment of anemia both in supportive cancer care and in nephrology. The product’s primary competitor is Johnson & Johnson’s (JNJ) Procrit.

Amgen also has another erythropoietin-stimulating agent (ESA), Epogen, in its portfolio. However, sales of the company’s ESA franchise have been under pressure due to safety concerns. Aranesp sales declined 13% to $3.1 billion in 2008.

We believe the environment will remain challenging for both products, especially Aranesp, which is seeing declining sales in both the supportive cancer care and nephrology settings. Moreover, Amgen has submitted a Risk Evaluation and Mitigation Strategy to the FDA. The approval of this plan, expected later this year, could further limit Aranesp sales.

We have a Neutral rating on Amgen. We expect investor focus to remain on the approvability of key pipeline candidate, denosumab, which is the future of Amgen.

Coronary artery disease is a common type of heart disease in which plaque buildup narrows the arteries and reduces blood flow to the heart. This can lead to chest pain or a heart attack.

XIENCE V is a drug coated stent that is used to treat CAD by propping open a narrowed or blocked artery and releasing the drug, everolimus, in a controlled manner over time so as to help prevent the artery from getting blocked again.

XIENCE V is currently available in the United States, Europe and other international markets. Shortly after its 2008 approval in the U.S., XIENCE V became the market-leading drug-eluting stent (DES) in the U.S. Clinical trial data has been very encouraging, which has resulted in a strong launch in the U.S. as well as overseas.

XIENCE V demonstrated superiority over Boston Scientific’s (BSX) TAXUS paclitaxel-eluting coronary stent system in the primary endpoints of two randomized, pivotal phase III studies.

The product has been taking significant share from its competitors, Boston Scientific’s Taxus and Johnson & Johnson’s (JNJ) Cypher (sirolimus-eluting system). Going forward, XIENCE V’s launch in Japan in early 2010 could potentially add another $500 million market opportunity.

Abbott is now a major player in the drug-eluting stent (DES) market with XIENCE V in its portfolio. The company is currently working on a next-generation drug coated stent called XIENCE PRIME. PRIME is on the market in Europe, and in a large-scale clinical program called SPIRIT PRIME in the U.S. If approved, PRIME could hit the U.S. market in the first half of 2012.

Abbott’s Vascular Products segment should continue posting robust growth mainly due to the strong performance of XIENCE V.

During the second quarter, Amgen’s ESA franchise contributed 36% to total revenues. Aranesp sales declined 16% to $693 million (U.S. - $338 million, down 21%; ex-U.S. - $355 million, down 11%), mainly due to a decline in demand reflecting the negative impact primarily in the supportive cancer care setting. Aranesp also lost some share in both the U.S. and ex-U.S. markets. International sales were also impacted by foreign exchange fluctuations. Epogen sales increased 3% to $638 million reflecting an increase in demand, which was supported by patient growth and an increase in average net sales price.

Johnson & Johnson’s ESA franchise recorded a 12% decline in sales during the second quarter of 2009 primarily due to the declining markets for ESAs in the U.S.  Although sales from Aranesp and Epogen are quite crucial for Amgen, Johnson & Johnson is less dependent on contribution from Procrit, which contributed about 10% and 2% to pharmaceutical business revenue and total revenues respectively during the second quarter.
 
The inclusion of a safety-related boxed warning on the labels of Amgen’s Aranesp and Epogen and Johnson & Johnson’s Procrit had an adverse impact on the sales of these products. We believe the environment will remain challenging for them especially Aranesp, which is witnessing declining sales in both the supportive cancer care and nephrology settings for which it is approved. Amgen has also submitted a Risk Evaluation and Mitigation Strategy (REMS) with the U.S. Food and Drug Administration (FDA). The approval of this plan, potentially later this year, could limit Aranesp sales further.

The new drug application (NDA) for the drug is pending since May 2007. Protocol related issues came up even during the initial stages. In November 2008, the FDA issued a Complete Response letter asking J&J to conduct additional audit work of clinical investigation sites and to address questions related to site monitoring.

The latest decision by the FDA proves that the company has not been able to convince the agency yet. Some of the violations include inability to ensure proper storage of the drug while patients were using it at home, failure to maintain proper documents on the dosage, not examining all the patients thoroughly, enrolling some patients who did not meet its own eligibility criteria for the study and hiring unqualified investigators.

Apart from the postponement of the FDA’s decision, the European Union (EU) also delayed a ruling on the drug last February. The review process has been halted until a Good Clinical Practice inspection is completed. The drug was launched in Canada and Switzerland last year under the trade name Zeftera.

The concerns raised by the FDA will push back the NDA approval. At present, Johnson & Johnson has 15 working days to explicate its corrective action. The FDA has threatened to take “regulatory action" if the company fails to give a detailed response. We hope J&J comes up with a comprehensive map of the course of corrective action to satisfy the FDA.

The merger still has to be approved by regulators in the U.S. and other countries before it becomes operational. The $41.1 billion deal will be paid for with a combination of cash and stock.

As a reminder, the two companies entered into the merger agreement in March 2009. Schering-Plough shareholders will receive 0.5767 Merck shares and $10.50 for each stock they own. The companies expect the deal to produce $3.5 billion in annual cost savings as 15% of the combined workforce would be shown the door. The merger is likely to be slightly accretive to earnings in the first year and significantly henceforth.

Merck and Schering-Plough have been long-time partners on cholesterol drugs Vytorin and Zetia, as well as collaborators in respiratory and other disease areas. Other than cholesterol, Schering has a large presence in respiratory therapeutics (Clarinex/OTC, Claritin, Nasonex) and animal health businesses with a large consumer base.

Temodar is Schering's leading oncology drug, an area in which Merck recently began devoting resources, expecting it to be a strong growth driver. Schering also has ex-US rights to Johnson & Johnson's (JNJ) blockbuster arthritis drug Remicade and its follow-on compound Golimumab.

Overall, we believe there will be little product overlap and expect the combination to provide significant synergies from sales, marketing, research and other back-office functions.

The deal should also help in geographic diversification of revenue sources as Schering currently generates 69% of its revenue overseas, while this figure is only 44% for Merck. The combined entity will have roughly 53% of sales coming from outside the U.S.

The combined company will have a more diverse portfolio across important therapeutic areas, including cardiovascular, respiratory, oncology, neuroscience, infectious disease, immunology and women’s health. The merger will also bring top-selling products under one umbrella.

We believe Merck needs Schering-Plough to help offset concerns of shrinking revenue due to near-term patent cliffs and softening sales of Singulair and Gardasil. Schering has relatively little exposure to patent cliffs through 2013. The combined company will have about 21% of forecasted 2012 revenue exposed to patent expirations.

Shareholders’ approval of the merger sent Merck shares up by 74 cents to $30.10 at close, while Schering-Plough closed at $26.62 after rising by 57 cents.

Chicago, IL – August 10, 2009 – Zacks Equity Research highlights 3M Company (MMM) as the Bull of the Day and Genzyme Corp. (GENZ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Biogen Idec (BIIB), Elan Corp. (ELN) and Johnson & Johnson (JNJ).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We are initiating coverage on 3M Company (MMM) with an Outperform rating and $80 target price. The company's second-quarter results benefited from the recovery in short development cycle businesses such as consumer electronics.

The company is aggressively managing its cost structure with a gradual improvement in gross margin. Meaningful uptake has yet to be seen from most major demand industries like automotive, manufacturing, general industrial and housing.

Bear of the Day:

Genzyme Corp. (GENZ) has been under significant pressure following the shutdown of its Allston manufacturing facility in June 2009. The shutdown is a major setback for the company as three drugs including key product Cerezyme were being manufactured at the facility.

Although Genzyme has resumed production, new lots will not be available for commercial supply until later this year. We believe the impact of this shutdown will affect the company's performance in the second half of the year. In fact, Genzyme recently slashed its outlook for 2009.

Supply constraints, manufacturing issues, and delays in new product launches will continue to weigh on the shares in the coming quarters. We would avoid the name.

Latest Posts on the Zacks Analyst Blog:

Elan Sues Biogen

Biogen Idec (BIIB) and Elan Corp. (ELN), co-developers of multiple sclerosis drug Tysabri, are now locked in a settlement suit. Elan recently sued Biogen claiming that the latter was trying to jeopardize its recent $1.5 billion deal with Johnson & Johnson (JNJ).

Biogen and Elan have a 50-50 partnership deal for Tysabri under which each has rights to acquire full control of the drug, if there is any ownership change at either company. Even though neither of the two companies is authorized to sell this right to a third party without the other’s consent, Biogen claims Elan has done this in its deal with J&J.

Get the full analysis of all these stocks by going to http://at.zacks.com/?id=5507.

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.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=5508.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5509.

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Investors can find such funds by checking out the entire list of the Zacks #1 Rank Income Equity Funds.

3 Solid Samples

Fallen Angels Income (FAINX) was incepted in September 2006. The investment seeks high current income with the potential for capital appreciation.

The fund invests in debt and equity securities that appear to be undervalued at current market prices. It may hold positions in the debt and equity securities of small, medium and large capitalization companies. The fund may also invest in shares of closed-end investment companies, as well as exchange trade funds.

Unit holders have to make a minimum initial investment of $10,000 to enter this Zacks#1 Rank (“Strong Buy") fund. It pays dividends monthly and has distributed $1.3664 per share since its inception.

HighMark Income Plus Allocation A (HMPAX) seeks income and secondarily capital appreciation. The fund strives to add value over the long term through a combination of asset allocation and security selection.

The fund is ideal for investors who wish to allocate their assets conservatively with a fixed-income focus. It normally invests either directly or indirectly in underlying funds, with 55% to 85% of assets in fixed-income securities and 15% to 45% of assets in equity securities.

David Goerz has led the fund since its inception in October 2004. He has 18 years of experience in investment management. The fund has an expense ratio of 0.62%.

Federated Equity Income A (LEIFX) seeks above-average income and capital appreciation. The fund focuses on stocks of companies that have the potential to pay high, growing dividends.

The fund ordinarily selects securities that have a comparatively low volatility in share price relative to the overall equity market, but may also invest in companies that offer superior growth prospects.

AT&T Inc. (T), Johnson & Johnson (JNJ) and Wyeth (WYE) are among the fund’s key holdings.

Discover Many More Funds

Learn more about the new Zacks Mutual Fund Rank and discover some of the best market-beating mutual funds by browsing our new mutual funds section. This part of Zacks.com offers a variety of tools, including mutual fund research, a new mutual fund screener, helpful answers to frequently asked questions and quick access to prospectuses and other information.

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward.

On the same day, the US agency gave its nod of approval to Invega Sustenna -- a once-monthly, injectable version of Invega to treat schizophrenia in adults. It will be marketed in the US by Janssen, a unit of Johnson & Johnson.

Invega Sustenna has been developed using the proprietary technology NanoCrystal Technology, which is a registered trademark of Elan Pharma International Ltd, Ireland, a subsidiary of Elan Corp. plc (ELN). The FDA approved the drug on the basis of two international, randomized, double-blind placebo-controlled studies of schizoaffective disorder patients with acute symptoms.

Approximately, one percent of the world’s population suffers from schizophrenia, which prevents a person from thinking clearly and distinguishing between reality and imagination. While there is no cure for schizophrenia, the symptoms and the risk of relapse can be managed with appropriate treatment that includes continuous, long-term therapy with proper medications.

As a reminder, Invega was initially approved in December 2006 to treat schizophrenia. The drug’s predecessor, Risperdal -- which is used to treat schizophrenia and symptoms of bipolar disorder (manic depression) -- lost its patent in 2008.  Risperdal is available as a generic but Johnson & Johnson has been focusing on transferring patients to Consta (long-acting Risperdal) and the newer Invega product.

Total franchise sales were $3.8 billion in 2008.  Invega sales should continue to ramp in the coming years due to the label expansion, which includes the recent FDA approval.
 
We have a Buy rating on the company’s shares based on its diverse and deep product mix, lack of cyclicality, strong financial position, and consistent record of earnings growth.

Chicago, IL – July 31, 2009 – 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: Becton, Dickinson (BDX), Baxter International (BAX), Johnson & Johnson (JNJ), Abbott Laboratories (ABT) and Tesoro Corporation (TSO).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

Becton Beats Zacks Estimate

Management at Becton, Dickinson (BDX) has increased its EPS guidance for the year. For 2009, it now expects profit from continuing operations to increase 11% to 12% over that in the last year to $4.92 to $4.96. Earlier, management estimated an increase of 7% to 9% in EPS.

Becton, Dickinson and Company develops, manufactures and markets medical devices, supplies, laboratory equipment and diagnostic products globally. The company is a world leader in safety needle products.

Becton competes with players like Baxter International (BAX), Johnson & Johnson (JNJ) and Abbott Laboratories (ABT), all of which have large resources. However, we believe that the company’s sound business model and product line should weather the current economic turbulence, and is capable of withstanding this competitive pressure. We feel that investors will benefit by adding this stock to their portfolios. As such, we continue to rate Becton a Buy.

Tesoro Misses, Outlook Gloomy

Tesoro Corporation (TSO) reported a weaker-than-expected second-quarter 2009 loss, reflecting lower gross margins and decreased throughput on the back of weak fuel demand and high inventories. This was partially offset by lower operating costs. Loss per share came in at $0.33, below the Zacks Consensus Estimate of $0.30.

In the year-ago period, the Texas-based marketer of petroleum products earned $0.03 per share. Revenue was down 53.0% year-over-year to $4.2 billion.

Tesoro’s refining segment experienced a significant decline in operating income (operating income of just $7 million vs. $85 million in the year-earlier quarter) due to struggling profit margins for the production of distillate fuels (like heating oil and diesel), as well as narrowing of the sweet/sour crude spread. The company’s throughputs also suffered from the maintenance at its Alaska and Golden Eagle, California refineries.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com