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The Zacks Analyst Blog Highlights: Shire plc, Impax Laboratories, GlaxoSmithKline, American Axle and Manufacturing and General Motors
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Chicago, IL – May 3, 2011 – 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: Shire plc (SHPGY - Snapshot Report), Impax Laboratories Inc. (IPXL - Snapshot Report), GlaxoSmithKline (GSK - Analyst Report), American Axle and Manufacturing Inc. (AXL - Analyst Report) and General Motors Co. (GM - Analyst Report).
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Here are highlights from Monday’s Analyst Blog:
Revenues Rise at Shire
Shire plc’s (SHPGY - Snapshot Report) first quarter 2011 earnings (excluding special items) of $1.23 per ADS surpassed the year-ago earnings by $0.22. Earnings were boosted by higher revenues. A lower adjusted effective tax rate also impacted earnings positively in the reported quarter. The Zacks Consensus Estimate was $1.20.
Quarter in Detail
Quarterly revenues increased 19% to $972 million, well above the Zacks Consensus Estimate of $945 million. Increased product sales helped boost revenues. The rise in product sales more than offset the decline in royalties during the first quarter of 2011.
Product sales went up 24% to $889 million. Product sales were pushed up by strong performances of Vyvanse (up 31% to $202.3 million), Replagal (up 55% to $105.4 million), and Lialda (up 37% to $87.1 million). Newly launched Intuniv and Vpriv also performed well, registering sales of $59 million and $41.9 million, respectively.
However, royalties declined 23% to $73.6 million. Royalty revenue mainly comprises income earned on the sale of the authorized generic version of Adderall XR, 3TC and Zeffix. During the fourth quarter, Shire received royalties from Impax Laboratories Inc. (IPXL - Snapshot Report) for Adderall XR (down 59%) and GlaxoSmithKline (GSK - Analyst Report) for 3TC and Zeffix (down 3%).
Adjusted research & development (R&D) costs climbed 36% to $173.2 million in the reported quarter. Increased investments in R&D programs contributed to the rise. Selling, general & administrative (SG&A) expenses climbed 14% to $352.2 million.
Selling, general & administrative (SG&A) expenses climbed 14% to $352.2 million. The inclusion of the operating expenses of Movetis, acquired late last year, led to the rise in SG&A expenses. Moreover, the costs incurred by Shire to maintain the sales growth displayed by its products also led to the rise.
Outlook
In addition to disclosing financial results, Shire also provided an outlook for 2011. For 2011, Shire is anticipating impressive revenue and earnings growth. Product sales are expected to register growth in line with that witnessed in 2010. The company expects the year-over-year increase in 2011 adjusted R&D and SG&A expenses (combined) to be at the upper end of the 10%-13% range. Adjusted effective tax-rate is forecasted in the range of 22%-24% for 2011.
Our Recommendation
We currently have a Neutral recommendation on Shire, which is supported by a Zacks #3 Rank (short-term Hold rating).
American Axle’s Positive Quarter
American Axle and Manufacturing Inc. (AXL - Analyst Report) posted a profit of $37.7 million or 50 cents per share in the first quarter of 2011 that more than doubled from $16.3 million or 22 cents per share in the year-ago quarter.
With this, the company has beaten the Zacks Consensus Estimate by 12 cents per share. The increase in profit was attributable to improved capacity utilization and sustained reductions in fixed cost structure.
Revenues in the quarter grew 24% to $645.6 million, up from the Zacks Consensus Estimate of $591 million. Customer production volumes for the North American light truck and SUV programs that the company currently supports for General Motors Co. (GM - Analyst Report) and Chrysler went up 11% from the prior-year the quarter.
The company progressed well in diversifying its customer base during the quarter. The company had a high exposure to customers, including GM and Chrysler. However, the company’s non-GM sales rose 44% to $178.4 million (27.6% of sales) in the quarter.
Content-per-vehicle (measured by the dollar value of its product sales supporting the company’s customers’ North American light truck and SUV programs) inched up 6% to $1,478 from $1,390 in the first quarter of 2010. Gross profit in the quarter increased $28.1 million to $115.4 million (17.9% of sales) from the first quarter of 2010.
Outlook
American Axle expects its sales to grow in excess of $3 billion by 2013 through product launches. It also aims to improve its business diversification in terms of product mix, customer base and served markets.
However, the company’s high exposure to General Motors and Chrysler could adversely affect its operating results in the near term. Furthermore, weak SUV demand, high commodity costs and pricing pressure by OEMs remain causes for concern. These factors have led the company to retain a Zacks #4 Rank on its stock, which translates to a “Sell” rating for the short term (1 to 3 months).
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Read the full analyst report on SHPGY
Read the full analyst report on IPXL
Read the full analyst report on GSX
Read the full analyst report on AXL
Read the full analyst report on GM
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