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For Immediate Release
Chicago, IL – August 2, 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 AmerisourceBergen Corporation ( ABC - Analyst Report ) , Express Scripts Holding Company ( ESRX - Analyst Report ) , Cardinal Health ( CAH - Analyst Report ) , Goldman Sachs Group Inc. ( GS - Analyst Report ) and Bank of America Corporation ( BAC - Analyst Report ) .
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Here are highlights from Wednesday’s Analyst Blog:
ABC Inks Deal with Express Scripts
AmerisourceBergen Corporation ( ABC - Analyst Report ) recently announced its decision to supply Express Scripts Holding Company ( ESRX - Analyst Report ) with pharmaceuticals worth $18.5 billion annually. The companies inked a three-year supply deal, which will take effect from October 1, 2012.
We note that Express Scripts has decided not to renew its pharmaceutical distribution agreement with Cardinal Health ( CAH - Analyst Report ) , one of AmerisourceBergen’s competitors, following its expiry on September 30, 2012. The deal contributed $9 billion to Cardinal Health’s annual revenues.
The decision follows Express Scripts’ purchase of Medco Health Solutions in April 2012. The erstwhile Medco Health was the largest customer of AmerisourceBergen, one of the world’s largest pharmaceutical services companies.
Management at AmerisourceBergen stated that the supply deal is expected to account for approximately 23% and 3% of its top and bottom lines, respectively. However, the deal is not expected to impact AmerisourceBergen’s projections for fiscal 2012 (ending September 30) and 2013 disclosed on July 26 while reporting its third quarter fiscal 2012 financial results.
AmerisourceBergen expects to end fiscal 2012 with earnings in the range of $2.80-$2.84 per share on flat-to-modest revenue growth. The company expects operating margin to grow in the high single-digit basis points range. Free cash flow, including capital expenditures of approximately $200 million, is expected in the range of $800- $900 million in fiscal 2012.
The company also provided preliminary expectations for fiscal 2013 while releasing the earnings results. AmerisourceBergen expects its AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group units to drive growth in fiscal 2013 aided by generic launches and recent acquisitions. The company anticipates high single digit to low double digit earnings growth in fiscal 2013.
We currently have a Neutral recommendation on AmerisourceBergen. The stock carries a Zacks #3 Rank (Hold) in the short run. We have a similar stance on Express Scripts. The Express Scripts contract has removed an overhang for AmerisourceBergen shares.
Goldman Settles Lawsuit for $26.6M
Harold Baer, the U.S. District Judge in Manhattan, received papers for approval of The Goldman Sachs Group Inc.’s (
- Analyst Report
$26.6 million settlement with investors related to the Public Employees' Retirement System of Mississippi pension fund. The settlement was made to compensate investors for misleading them regarding the risks associated with mortgage-backed securities worth $698 million.
In February 2012, the federal judge in Manhattan, Harold Baer, had ordered Goldman to deal with the securities class-action lawsuit filed by the pension fund, rejecting all the arguments the latter had in its defense.
Investors, led by the Public Employees' Retirement System of Mississippi, filed a lawsuit against Goldman in the federal court of Manhattan, over GSAMP Trust 2006-S2 securities in 2009. The securities, which were offered to the investors, were backed by second-lien home loans. These loans were purchased from California-based subprime lender New Century Financial Corp., which was bankrupt in 2007.
The complaint accused Goldman of having deceptively sold the sub-prime mortgage-linked securities that gradually failed. It also claimed that the company misrepresented the value of instrument by providing materially misleading statements.
Moreover, the Mississippi pension fund alleges that Goldman failed to expose New Century’s ignorance in meeting its own underwriting standards and the company’s use of overstated appraisals. Goldman has been blamed for overlooking these issues while buying loans from New Century and selling them as securities to investors. Eventually, the market exhibited a downtrend, resulting in huge losses for the common investors.
Most recently, in May 2012, Bank of America Corporation ( BAC - Analyst Report ) received approval for a $315 million settlement with investors related to the Public Employees' Retirement System of Mississippi pension fund. Though BofA did not admit any wrongdoing, Merrill Lynch, purchased by the investment bank in 2009, emphasized that losses faced by investors were attributable to the downturn in the economy and housing bubble.
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