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The Zacks Analyst Blog Highlights: Watson Pharmaceuticals, Shire, Depomed, Comcast and Microsoft

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For Immediate Release

Chicago, IL – May 18, 2012 – 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 Watson Pharmaceuticals Inc. (), Shire , Depomed Inc. (DEPO), Comcast Corporation (CMCSA - Analyst Report) and Microsoft Corporation (MSFT - Analyst Report).

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Here are highlights from Thursday’s Analyst Blog:

Watson & Shire in Legal Battle

 

Watson Pharmaceuticals Inc. () recently announced that it has filed an Abbreviated New Drug Application (ANDA) with the U.S. Food and Drug Administration (FDA) for the approval of a generic version of Shire’s ulcerative colitis drug, Lialda.

In response, Shire along with Cosmo Technologies Ltd., and Guiliani International Ltd. filed a suit against Watson Pharma in the U.S. District Court for the Southern District of Florid, to prevent the generic company from commercializing its generic drug prior to the expiration of Lialda’s patent. Since the lawsuit was filed under the provisions of the Hatch-Waxman Act, the FDA cannot approve Watson Pharma's ANDA for up to 30 months from the date that Shire received notice of the ANDA filing or until final resolution of the matter before the court, whichever occurs earlier.

According to the IMS Health data, sales of Lialda in the U.S. amounted to $390 million for the 12 months ended March 31, 2012.

Last month, Watson Pharma was in another patent infringement lawsuit, when the company announced the filing of an ANDA with the FDA for a generic version of Depomed Inc.’s (DEPO) diabetes drug, Glumetza. The drug is used as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes.

In response, Depomed and Valeant International together filed a lawsuit against Watson Pharma in the U.S. District Court for the District of Delaware, to prevent Watson Pharma from commercializing generic Glumetza before the patents expire.

Our View

We currently have a Neutral recommendation on Watson Pharma. The stock carries a Zacks #2 Rank (Buy rating) in the short run.

We expect the new generic product launches over regular intervals to help drive sales of the company’s Global Generic segment, which climbed 86% in the first quarter of 2012 to $1.12 billion.

 

Comcast Teams Up with Skype

 

Comcast Corporation (CMCSA - Analyst Report), the largest cable TV operator, is teaming up with Microsoft Corporation (MSFT - Analyst Report)-owned Skype to launch high-definition (HD) video calls on Comcast’s Xfinity cable TV services. We believe that Comcast has launched this service in order to improve its subscriber base as well as add another source of revenue for the company.

Comcast’s Xfinity TV is a web-based on demand service for customers who can access both video-programming and internet at the same time. Skype through Xfinity TV includes an adaptor box, a high quality video camera and helps subscribers to make and receive video calls on their HDTV. Through a specially designed remote control they can send and receive instant messages on Skype while watching a TV show. Furthermore, customers can also accept incoming Skype audio calls with the help of a caller ID.

It can incorporate the existing Skype contacts into a global address book which also includes Facebook, Outlook, gmail and smartphone contacts. This allows the customer to find out whether any of his/her friends is online. The company offers this service at $9.95 per month for Xfinity triple pay customers.     

With the loss of 37,000 subscribers, Comcast recently reported the 20th straight quarterly decline in video customers. The ongoing macroeconomic fluctuations and intensified competition in the pay-TV market are some of the main reasons for the continuous slide.

We believe that Comcast will benefit from the partnership because by providing Skype services through television they would not lose subscribers who use Skype through tablets and mobile phones. Additionally, bringing social interaction through television viewing will place Comcast ahead of its peers.

Comcast has already launched this service in Boston and Seattle and expects to launch it in South Florida by the end of this week, the success of which might prompt the other service providers to come up with a similar service.

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