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For Immediate Release
Chicago, IL – August 15, 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 Discover Financial Services (DFS - Analyst Report), Visa Inc. (V - Analyst Report), Mastercard Incorporated (MA - Analyst Report), Eli Lilly and Company (LLY - Analyst Report) and Bristol-Myers Squibb (BMY - Analyst Report).
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Here are highlights from Tuesday’s Analyst Blog:
Discover Intros Diners Club in China
With the objective of tapping the booming credit card market in China, Diners Club International Ltd., an operating unit of Discover Financial Services (DFS - Analyst Report), has joined Industrial and Commercial Bank of China (“ICBC”) to introduce a Diners Club International franchise in the Asia-Pacific region. ICBC is one of the largest commercial banks in China catering to a large section of the Chinese population.
ICBC will function as a franchise of Discover Financial in China and will be responsible for issuing and acquiring on behalf of the brand. It is expected that this will significantly increase the market presence of the Diners Club brand.
Since the takeover of Diners Club in 2008, Discover Financial has been on an aggressive acquisition spree, partnering with various institutions to increase the popularity of Discover and Diners Club cards across the globe. The company entered into a franchise agreement with Diners Club Ecuador in March 2012. Discover Financial has also penned agreements with Banco Popular de Puerto Rico commercial bank and WorldPay.
Visa Inc. (V - Analyst Report) and Mastercard Incorporated (MA - Analyst Report), two of the company’s closest competitors, are equally proactive on expanding their services inorganically. Visa entered into an agreement with disbursement and bulk payment solutions provider Obopay Disbursements to pay out electronic funds to a prepaid card. Soon after, the company joined Air Canada to facilitate its Canadian customers with Visa debit card to purchase Air Canada tickets using their debit cards.
Mastercard also joined forces with Rearden Commerce, provider of various business and customer solutions, to offer a brand new personalized website by deploying the latter’s Deem commerce platform. The newly launched website, dubbed “MasterCard Business Network” will enable the smooth facilitation of operations by small and medium-sized businesses as well as aid them to streamline their expenses.
Discover Financial currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.
Eli Lilly Ups Guidance
Eli Lilly and Company (LLY - Analyst Report) recently updated its reported (GAAP) guidance for 2012 following the early payment of financial obligations from Amylin Pharmaceuticals. Eli Lilly raised its reported guidance to reflect the additional income received from Amylin.
Amylin, which was recently acquired by Bristol-Myers Squibb (BMY - Analyst Report), has made a payment of $1.259 billion related to its revenue sharing obligation for exenatide. As a reminder, Amylin and Eli Lilly had terminated their long-standing partnership for the worldwide development and commercialization of exenatide in November 2011.
As a result of the early payment from Amylin, Eli Lilly raised its 2012 reported earnings guidance to $3.72 - $3.82 per share from $3.29 - $3.39 per share. Eli Lilly expects third quarter reported results to be boosted by about 43 cents due to the recognition of the additional income.
The company also expects to recognize income of 25 cents per share in 2013 related to the transfer of exenatide commercial rights outside the US to Amylin. Amylin has also repaid a $165 million loan plus interest.
Eli Lilly, meanwhile, maintained its adjusted earnings outlook of $3.30 - $3.40 per share on revenues of $21.8 - $22.8 billion. The Zacks Consensus Estimate currently stands at $3.38 per share.
While the loss of Zyprexa exclusivity is expected to impact revenues by more than $3 billion, products like Cymbalta, Cialis, Humalog, Alimta and Forteo are expected to continue performing well. Moreover, new products like Effient, Axiron and Tradjenta should also contribute to revenues.
The Animal Health business should also continue performing well. Meanwhile, revenue growth in Japan and emerging markets will be impacted by pricing actions in Japan and the loss of patent protection for Zyprexa and other products in some emerging markets.
Eli Lilly is working on controlling costs, and expects operating expenses to remain flat in 2012. While marketing, selling and administrative expenses are expected to decline to $7.3 billion - $7.7 billion, research and development expenses are expected to remain flat or increase to $5.0 billion - $5.3 billion.
Eli Lilly remains on track to meet or exceed its mid-term guidance. From now through 2014, the company expects annual net income of at least $3 billion on revenues of at least $20 billion. Operating cash flow is expected to be at least $4 billion every year during this time period. Post 2014, Eli Lilly expects to return to top and bottom-line growth.
We currently have a Neutral recommendation on Eli Lilly. The company carries a Zacks #2 Rank (short-term Buy rating).
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