Zacks Analyst Blog Highlights: J.M. Smucker Company, GlaxoSmithKline, Washinton Post, United Technologies Corp and General Electric Company

For Immediate Release

Chicago, IL – February 25, 2010 – 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: J.M. Smucker Company (SJM - Analyst Report), GlaxoSmithKline (GSK - Analyst Report), Washinton Post (WPO - Analyst Report), United Technologies Corp (UTX - Analyst Report) and General Electric Company (GE - Analyst Report).

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Here are highlights from Wednesday’s Analyst Blog:

Smucker Beats, Raises Guidance

The J.M. Smucker Company (SJM - Analyst Report) reported results for the third quarter of 2010 with earnings of $1.17 per share. Earnings were well above the Zacks Consensus Estimate of 90 cents per share and were up 34.5% year-over-year.

Gross margin for the quarter expanded 409 basis points (bps) to 38.0% versus 34.0% in the prior-year quarter. The increase was primarily attributable to Folgers. Moreover, the impact of lower green coffee raw material costs, freight costs and the extra five days of business also had a favorable impact on the gross margin.

The operating margin for the quarter expanded 593 bps to 17.4% from 11.5% in the comparable prior-year quarter.

Year-to-date, cash provided by operations was $508.7 million compared to $289.0 million in the prior-year period. The company has a debt-to-capitalization ratio of 14.7%.

Concurrent with the earnings release, management raised its guidance for fiscal 2010. Net sales growth is expected in the range of $4.5 billion to $4.6 billion. Annual earnings are now expected to be in the range of $4.02 to $4.07, compared to earlier guidance of $3.95 to $4.05 per share.

The company remains committed to its long-term strategic objectives of 6% annual sales growth and greater than 8% earnings growth, excluding charges.

Concerns Over Avandia Hurt GSK

GlaxoSmithKline (GSK - Analyst Report) recently issued a statement regarding the findings of a Senate Committee on the company's diabetes drug Avandia. The company stated that the conclusions drawn by the Committee on the safety of Avandia are based on analyses that are not consistent with the scientific evidence supporting the safety of the drug.

According to the report issued by the Committee, Glaxo was aware of the potential heart risk associated with the use of Avandia before this information became known to the public. The Committee has also recommended that Avandia should be withdrawn from the market.

Avandia is a thiazolidinedione anti-diabetic agent indicated as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes. The product first came under fire in 2007 when the New England Journal of Medicine published an analysis of studies conducted with people who had taken Avandia.

According to the analysis, a higher risk of heart attack was observed in patients taking Avandia compared to patients taking other diabetes drugs or no diabetes medication. Avandia's label was revised to include a warning regarding the potential cardiovascular risk.

Following the emergence of safety concerns related to the use of Avandia, Avandia/Avandamet franchise sales plunged to $1.5 billion in 2008 from $2.4 billion in 2007.

Washington Post Earnings Jump

The Washinton Post Company (WPO - Analyst Report) recently reported fourth-quarter 2009 results. Quarterly earnings jumped to $8.71 per share from $2.01 reported in the prior-year quarter.

However, excluding one-time items, quarterly earnings fell 16% to $8.82 per share from $10.54 posted in the year-ago quarter. While times are tough, the company’s diversified business mix is faring better than many of its publishing house competitors.

Revenue for the quarter rose by 6% year-on-year to $1,238.4 million, driven by revenue growth at the Education and Cable Television divisions, offset by revenue declines at the Newspaper, Magazine and Television Broadcasting divisions.

The Education division delivered strong performance -- revenue was up 16% to $709.3 million, which we think will continue in fiscal 2010. At fiscal year-end 2009, enrollment totaled 104,900, up 32%. The increase in enrollment was particularly strong at Kaplan University’s online offerings, which surged 47% in the year.

The Cable division is also performing well -- revenue was up 4% to $190.6 million, driven by sustained growth in cable modem and telephone revenue, and rate increase in June 2009.

UTX Raises $2.25 Billion in Debt

United Technologies Corp (UTX - Analyst Report) sold $2.25 billion in debt in a two-part sale. This includes $1.25 billion of 10-year notes priced to yield 87 basis points over comparable U.S. Treasuries and $1.0 billion of 30-year bonds priced to yield 109 basis points more than U.S. Treasuries.

The notes of each series will bear interest at the applicable rate and will accrue interest from the most recent date till which interest has been paid or duly provided for. Interest will be payable on the notes semiannually in arrears on April 1 and October 1 of each year, commencing on October 1, 2010.

The notes of each series will be redeemable, in whole or in part, at the option of the company at any time, at a redemption price in U.S. dollars equal to the greater of the following:

• 100% of the principal amount of the applicable series of notes to be redeemed; or
• The sum of the present values of the remaining scheduled payments of principal and interest on the applicable series of notes to be redeemed, discounted to the redemption date on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months.

The redemption price will also include interest accrued till the date of redemption on the principal balance of the notes being redeemed.

These net proceeds will be used primarily to fund the acquisition from General Electric Company (GE - Analyst Report) of the GE Security business for a purchase price of approximately $1.8 billion pursuant to an agreement it entered into in November 2009 with General Electric.

Subject to the satisfaction of customary closing conditions, the closing is anticipated to take place late in the first quarter or early in the second quarter of 2010. GE Security, part of GE Technology Infrastructure, supplies security and fire safety technologies for commercial and residential applications through a broad product portfolio that includes fire detection and life safety systems, intrusion alarms, video surveillance and access control systems.

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Read the full analyst report on SJM

Read the full analyst report on GSK

Read the full analyst report on WPO

Read the full analyst report on UTX

Read the full analyst report on GE