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Analyst Blog

Tullow Finds Oil for the 2nd Time in Orinduik Block, Guyana

Posted Mon Sep 16, 05:59 pm ET

by Zacks Equity Research

Tullow Oil plc TUWOY recently announced its second oil discovery from the Joe-1 exploration well in the Guyana Basin. This discovery follows the company’s large and substantial oil discovery in August at its Jethro-1 exploration well in Guyana.

Stena Forth drillship has drilled the 2,175 metres deep Joe-1 exploration well. Further assessment and sampling proved that Joe-1 has witnessed 14 metres of net oil pay in high-quality oil-bearing sandstone reservoirs of Upper Tertiary period. Being the first oil discovery in Upper Tertiary,

Joe eliminates the risk from the petroleum system in the western Orinduik block.

Joe-1 was drilled by Tullow Guyana B.V., Tullow Oil’s fully owned subsidiary on the Orinduik licence. Tullow Guyana B.V. holds 60% interest in the Orinduik block while TOTAL S.A.’s TOT local unit owns 25%. The remaining stakes are held by Eco (Atlantic) Guyana Inc. With the completion of the exploration, the Stena Forth drill ship will return to Ghana.

Per chief executive Angus McCoss, the Joe-1 discovery and its related opportunities open doors to other possibilities in the Orinduik Block. As a result, the company is highly upbeat about the next stage of the program, which constantly unveils the multi-billion barrel capacity of this acreage.

This London-listed Irish exploring company will now assess data from the Joe-1 and Jethro-1 discoveries and await the results of the Carpa well to determine the ideal spin-off from the exploration and the ensuing appraisal programme.

 

Zacks Rank & Key Picks

Tullow Oil carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP Midstream Partners BPMP and Dril-Quip, Inc. DRQ, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.

Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

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Can Honda's 2030 Vision and Restructuring Efforts Pare Woes?

Posted Mon Sep 16, 04:29 pm ET

by Zacks Equity Research

Honda Motor’s HMC shares have scaled up 2.5% on a year-to-date basis, underperforming the broader industry’s growth of 10.2%. Notably, the Japanese automaker missed earnings estimates in the last two quarters.  The company has been bearing the brunt of high operating expenses and frequent recalls, which not only increase costs but also damage the firm’s reputation. In fact, it is the largest customer of the faulty Takata airbags that can explode and shoot out metal fragments after a crash.

Notably, in first-quarter fiscal 2020, the company reported operating profit of ¥252.4 billion, down 15.7% y/y amid high selling, general and administrative expenses; adverse impacts of foreign currency; along with lowered sales revenues. Further, the company expects revenues to decline 1.5% year over year to ¥15.7 trillion in fiscal 2020.

Also, Honda expects vehicle sales from Japanese, U.S. and Asian markets to decline moderately from a year ago. U.S.-Sino trade tensions will also impact its unit sales in China.

Amid these headwinds, the firm is making serious efforts to drive long-term prospects.While the stock might take some time to bounce back on the growth trajectory, retaining this Zacks Rank #3 (Hold) company in your portfolio seems to be a prudent strategy.

Let’s delve deeper into its initiatives and plans to boost performance.

Ready to Ride the Electric and Autonomous Wave

Honda’s 2030 Vision, which reveals the future path of the Japanese auto giant, emphasizes on electrified mobility products to achieve a zero-carbon society. The company’s focus on the development of EVs and self-driving cars bodes well in light of changing circumstances in the automobile industry. Honda aims to generate 66% of its global automobile sales from EVs by 2030.

By 2030, one can expect a wide range of electric, hybrid and other environment-friendly vehicles that will boost the firm’s prospects. In addition to electrification plans, Honda aims at rolling out level 4 autonomous vehicles for sale by 2025, driven by new technologies and robotics and AI-related services.

As part of 2030 Vision, Honda also aims at reducing development costs by focusing more on the coordination between research and development, as well as procurement and manufacturing of products. The firm also aims at developing collision-free-technologies to ramp up the safety of cars and improve connected mobility services.

Strategic Collaborations Boost Prospects

Honda has been undertaking frequent collaborations to expand business and bolster prospects. For instance, the company’s joint venture (JV) with GAC Group aims at building electric battery cars and plug-in hybrid vehicles in China to meet the country’s green car quotas.

Further, Honda’s deal with General Motors’ GM autonomous-driving Cruise arm focuses on developing effective shared autonomous vehicles to counter Tesla’s TSLA dominance. Per the pact, Honda had invested $750 million last year and aims to invest another $2 billion over the next 12 years to develop self-driving technologies.

Global Restructuring Moves to Result in Savings

As part of the global restructuring move, Honda has been taking steps to control costs and optimize production capacity. Amid Brexit uncertainty and slowdown in Turkish economic growth, the Japanese carmaker is planning to close both U.K. and Turkish factories by 2021 to streamline budgets for big spending plans on electrification.

Reportedly, the company is set to stop automobile production in Argentina by 2020. Resultantly, Honda will be able to lower fixed costs and vehicle production expenses, thereby generating savings that can be directed toward more profitable opportunities and rev up profits.

Last Words

While near-term headwinds in the form of high expenses and drab sales outlook remain, the firm’s initiatives look promising enough to bolster long-term prospects of the company, which carries a VGM Score of B. Meanwhile, investors interested in the auto sector can consider Lithia Motors LAD, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Here's Why You Should Hold FLEETCOR (FLT) in Your Portfolio

Posted Mon Sep 16, 04:26 pm ET

by Zacks Equity Research

A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed by tough market conditions.

Here we discuss about FLEETCOR Technologies, Inc. FLT, a financial transaction services provider, which has had an impressive run on the bourse on a year-to-date basis. Shares of FLEETCOR have surged 57.3% on a year-to-date basis compared with the 40.2% rally of the industry it belongs to and 18.7% rise of the Zacks S&P 500 composite.

 

The company has long-term expected earnings per share (three to five years) growth rate of 15.6%. Moreover, earnings are expected to register 12.3% growth in 2019 and 15.4% in 2020.

Factors Driving FLEETCOR

FLEETCOR’s top line continues to grow organically driven by increase in both volume and revenues per transaction in some of its payment programs. In second-quarter 2019, organic revenue growth was 13%, driven by solid double-digit growth across the company’s product categories — fuel, corporate payments, tolls and lodging.

Its fuel card business was up 9%, corporate payments increased 26%, toll business grew 17% and lodging business increased 13% organically. Organic revenue growth was 10%, 9% and 8% respectively in 2018, 2017 and 2016. For 2019, the company continues to expect 9-11% organic growth.

The company has also been active on the acquisition front. In 2019 so far, FLEETCOR completed the purchase of SOLE Financial and Nvoicepay. SOLE Financial is expected to extend FLEETCOR’s payroll and card portfolios and expand its addressable market, thus enabling it better serve small and medium-sized as well as larger businesses. Nvoicepay is expected to expand FLEETCOR’s corporate payments business with full disbursement accounts payable cloud platform.

Since 2002, the company has acquired more than 75 companies and commercial account portfolios. It has been continuously acquiring and investing in companies in the United States as well as internationally to expand customer base, headcount and operations and diversify its service offerings across industries.

Effective execution led to cash, cash equivalents, and restricted cash of $1.49 billion as of Jun 30, 2019, with no long-term debt to clear off. This significant amount of cash provides FLEETCOR the flexibility to pursue strategic acquisitions and other related investments.

Risks

In spite of significant growth prospects, FLEETCOR is not free from headwinds. Higher interest expense stemming from increase in LIBOR rate and additional borrowings for share repurchase and to fund Cambridge acquisition (completed in 2017) have been weighing on the company’s earnings. FLEETCOR’s fuel card, workforce payment solutions and gift card businesses are affected by seasonality.

Global presence makes it vulnerable to the risks associated with foreign currency exchange rate fluctuations. Its policy of acquiring a large number of companies results in some integration risk

Zacks Rank & Stocks to Consider

FLEETCOR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Huron Consulting HURN, Charles River Associates CRAI and Fiserv FISV. While Fiserv sports a Zacks Rank #1, Huron Consulting and Charles River Associates carry a Zacks Rank #2 (Buy).

Long-term earnings (three to five years) growth rate for Huron Consulting, Charles River Associates and Fiserv is estimated 15.6%, 13% and 12%, respectively.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

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Google Pays Up in France

Posted Mon Sep 16, 03:54 pm ET

by Sejuti Banerjea

Alphabet-owned Google GOOGL has decided that it’s better to pay the piper. The company has settled its tax dispute with French authorities that have been investigating it since 2016, when they raided its French offices.

It’s a fairly normal practice for companies operating across Europe to choose their headquarters in a low-tax zone and book all their sales there and Google’s official jurisdiction, like many other technology companies was Ireland with its 12.5% tax rate. But in Google’s case, the investigation likely revealed that the company omitted this safeguard.

As a result, it was easy game for a French court, which ordered it to pay a €500 million fine, in addition to the €465 million in back taxes it had already agreed to pay. That adds up to more than a billion dollars. The finance ministry was looking for 1.6 billion euros.

The company may have settled to bring things to a quick conclusion in the light of an ongoing antitrust probe of big technology companies back home that is likely to be far more comprehensive and difficult to handle.

However, the downside is that it could trigger a series of fines and investigations across Europe as other countries also try to get in on the cash. The UK in particular is looking for something, especially since the sweetheart deal ($160,000) it got from Google a few years back was nowhere near what it should have been. Still, UK needs U.S. support as it tries to leave the EU. So it may not finally go ahead with these plans. 

The French authorities earlier announced a one-of-its-kind 3% tax on digital companies that led President Trump to threaten increased tariff on French wine. France tried to get support for an EU-wide digital tax, but Ireland, Denmark, Sweden and Finland opposed the move.

Larger economies within the EU have always been in opposition to the principle of a member nation attracting foreign investment by lowering taxes. That’s because it leads to significant revenue loss for them. Google earlier settled with Italian authorities by handing over €306 million in back taxes.

The company maintains, “We remain convinced that a coordinated reform of the international tax system is the best way to provide a clear framework for companies operating worldwide.” Such an agreement may be ready as early as next year when the 134 OECD nations meet in Paris. France has said it will remove the digital tax once the international tax system kicks in.

Recommendations

Alphabet shares carry a Zacks Rank #2 (Buy). Buy-ranked Internet services companies you can also invest in include TiVo Corp. TIVO, Cango Inc. Sponsored ADR CANG, Sohu.com Inc. SOHU and Upwork Inc. UPWK. You can also see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

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Aimmune's Peanut Allergy Drug Gets FDA Committee's Support

Posted Mon Sep 16, 01:18 pm ET

by Zacks Equity Research

Aimmune Therapeutics, Inc. AIMT announced that the Allergenic Products Advisory Committee (APAC) convened by the FDA voted in favor of pipeline candidate, Palforzia.

The committee supported the use of Palforzia in children and teens with peanut allergy. The APAC voted in favor of the candidate’s effectiveness in the ratio of 7 to 2. The committee also voted in the ratio of 8 to 1 in favor of the safety data in conjunction with additional safeguards, which are adequate to support the use of Palforzia.

We note that Palforzia, the proposed trade name of AR101, is a complex, biologic oral immunotherapy (OIT) candidate, which is designed to reduce the incidence and severity of allergic reactions. These include anaphylaxis after the accidental exposure to peanut in patients aged 4-17 years with a confirmed diagnosis of peanut allergy.

Aimmune’s Biologics License Application (BLA) seeking approval for Palforzia for the treatment of children and adolescents with peanut allergy is currently under FDA review, with an action date in late January 2020. The BLA was submitted in December 2018. The agency had earlier granted the Fast Track and the Breakthrough Therapy designations to the candidate. Additionally, the European Medicines Agency (EMA) is also reviewing the company’s Marketing Authorization Application (MAA) for the same. Both agencies have conditionally accepted Palforzia as the trade name for AR101.

As part of its original BLA submission, Aimmune has proposed a number of risk-management measures in line with the recent Advisory Committee discussion — the requirement for the initial dose escalation and first dose of each dose-escalation level to be administered in a facility equipped to treat systemic allergic reactions, documentation of patients having a prescription for injectable epinephrine prior to the initiation of Palforzia, distribution of therapy through specialty pharmacies, and a purposefully-designed packaging such that patients only receive their appropriate dose. Moreover, the company proposed a Black Box warning in the product labeling in the original BLA submission, consistent with immunotherapies indicated to treat allergic conditions.

Trading was halted on Sep 13, owing to the scheduled meeting of APAC. Shares of Aimmune gained in after-hours trading. Meanwhile, shares of the company have gained 3.1% so far this year against the industry’s decline of 1.7%.

A potential approval will boost the growth prospects of this clinical-stage biopharmaceutical company. Peanut allergy is one of the most common food allergies, which affects more than 1.6 million children and teens in the United States alone.

The candidate is also being evaluated in combination with Sanofi’s SNY dupilumab in a phase II study for treating peanut allergy. The study was sponsored by Sanofi’s partner Regeneron REGN.

Apart from Palforzia, Aimmune is also evaluating its second investigational, complex biologic product, AR201, for the treatment of egg allergy. The study was initiated in August 2019. The company is exploring another product candidate to treat multi-tree nut allergy.

Zacks Rank & A Stock to Consider

Aimmune currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the biotech sector is Amgen AMGN, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amgen’s earnings per share estimates have increased from $13.89 to $14.30 for 2019, and from $14.72 to $15.42 for 2020, in the past 60 days.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Here's Why You Should Invest in Brown & Brown (BRO) Stock

Posted Mon Sep 16, 12:59 pm ET

by Zacks Equity Research

Brown & Brown BRO is well-poised for growth based on organic initiatives, strategic buyouts and a solid capital position.

Shares of Brown & Brown have rallied 30.6% year to date compared with the industry's growth of 28.4% and the Zacks S&P 500 composite’s rise of 18.6%. The company has seen its estimates for 2019 and 2020 move up nearly 3% and 1.4%, respectively, in the past 60 days, indicating investor optimism on the stock.



The Zacks Consensus Estimate for 2019 and 2020 earnings indicates 13.4% and 7.8% growth, respectively, from the year-ago reported figure. The expected long-term earnings growth is 10%. The company has an impressive Growth Score of B. This style score analyzes the growth prospects for a company. Back-tested results show that stocks with a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best investment opportunities.

Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments. This has been driving commission and fees that increased at a five-year CAGR of 5.1%. For 2019, the company estimates commissions to grow substantially in Retail. Also, the company expects premium rates to increase slightly across most lines of business in 2019.

The company has a solid history of acquisitions, adding about 500 insurance intermediary operations in more than two decades. In fact, the last year was the biggest ever in terms of acquisition activity as the company added Hays Companies to its portfolio. Brown & Brown estimates Hays to deliver $210 million to $220 million of annual revenues, $47 million to $53 million of EBITDAC and net income per share of 2 cents to 3 cents in 2019. Solid capital and liquidity position should continue to aid the company in making such strategic buyouts driving company’s growth.

Brown & Brown intends to implement a new annual incentive program for its middle-market producers in the Retail division. Also, in collaboration with QBE, the company launched Core Commercial Program, to be licensed in all 50 states, mainly targeting middle-market companies with annual premiums of $0.1 million and below. These should continue to fuel inorganic growth.

Given sustained strong performance, the company engages in effective capital deployment. It has a stellar track record of raising dividend for the last 25 years, currently yielding 0.9%. This apart, the company also has $500 million under its share buyback authorization.

The Zacks Rank #2 insurance broker has a decent history of delivering positive surprise with the average beat being 9.06%.

Other Stocks to Consider

Some other top-ranked property and casualty insurers include Alleghany Y, Hallmark Financial Services HALL and Donegal Group DGICA, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered 30.80% positive surprise in the last reported quarter.

Hallmark Financial underwrites, markets, distributes, and services property/casualty insurance products to businesses and individuals in the United States. The company delivered 20.22% positive surprise in the last reported quarter.

Donegal Group provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company delivered 160.00% positive surprise in the last reported quarter.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Progressive's August Earnings Decrease, Revenues Rise Y/Y

Posted Mon Sep 16, 10:58 am ET

by Zacks Equity Research

The Progressive Corporation PGR reported earnings per share of 30 cents for August 2019, down 36% year over year. Improvement in the top line was offset by higher expenses.

Year to date, shares of Progressive have rallied 20.5%, outperforming the industry’s 7.8% increase.



Numbers in August

Progressive recorded net premiums written of $2.9 billion in the month, up 13% from $2.6 billion in the year-earlier period. Net premiums earned were about $2.8 billion, up 14% from $2.5 billion recorded last August.

Net realized losses on securities were $33.7 million against the prior-year income of $76.4 million.

Combined ratio — percentage of premiums paid out as claims and expenses — deteriorated 110 basis points (bps) year over year to 93.4%.

Total operating revenues came in at $2.9 billion. The top line improved 13.7% year over year owing to a 13.5% increase in premiums, a 17.5% surge in investment income, 16.3% growth in fees and other revenues plus a 22.8% rise in service revenues.

Total expenses shot up 15% to $2.7 billion. This increase can be primarily attributed to 15.9% higher losses and loss adjustment expenses, 13.4% rise in policy acquisition costs and an 11.1% jump in other underwriting expenses.

In August, policies in force were impressive in both Vehicle and Property businesses. In its vehicle business, Personal Auto segment improved 11% year over year to nearly 14.5 million. Special Lines increased 3% from the year-earlier month to 4.6 million policies.

In Progressive’s Personal Auto segment, Agency Auto expanded 11% to 6.7 million while Direct Auto increased 12% to nearly 7.6 million.

Progressive’s Commercial Auto segment rose 8% year over year to 0.8 million. The Property business had about 2.1 million policies in force in the reported month, up 16% year over year.

Progressive’s book value per share was $23.05 as of Aug 31, 2019, up 20.2% from $19.17 as of Aug 31, 2018.

Return on equity in the trailing 12 months was 33.5%, up 740 bps from 26.1% in August 2018. Debt-to-total-capital ratio improved 90 bps year over year to 24% as of Aug 31, 2019.

Zacks Rank and Stocks to Consider    

Progressive currently carries a Zacks Rank #3 (Hold).

Some better-ranked property and casualty insurers include Alleghany Y, Hallmark Financial Services HALL and Donegal Group DGICA, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered 30.80% positive surprise in the last reported quarter.

Hallmark Financial underwrites, markets, distributes, and services property/casualty insurance products to businesses and individuals in the United States. The company delivered 20.22% positive surprise in the last reported quarter.

Donegal Group provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company delivered 160.00% positive surprise in the last reported quarter.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Why Should You Retain Centene (CNC) Stock in Your Portfolio?

Posted Mon Sep 16, 10:46 am ET

by Zacks Equity Research

Centene Corporation CNC is well-poised for development on the back of a growing top line plus mergers and acquisitions strategy.

The company has witnessed 2020 earnings estimates move 0.4% north over the past seven days.

Centene also boasts a stellar earnings surprise history, having outpaced the Zacks Consensus Estimate in the trailing four quarters, the average being 4.4%. This trend of consecutive estimate beats vouches for the company’s operating efficiency.

The company is well-placed for growth, evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.

Moreover, it revised its 2019 guidance after delivering solid second-quarter results. It now expects revenues in the range of $73.6-$74.2 billion, indicating the mid-point to be 23.2% above the reported figure of 2018. Adjusted EPS is expected in the band of $4.29-$4.49, the mid-point suggested to be 24% higher than last year’s reported figure.

Now let’s see what makes this stock an investor favorite.

Centene has been witnessing consistent and significant revenue growth since 2002. The company saw a CAGR of 39.6% from 2012 to 2018. This momentum also continued in the first half of 2019 with the metric surging 34.4% year over year. This upside could primarily be backed by membership growth, expansion of contracts and other investments and we expect the top line to continue growing.

The company’s mergers and acquisitions activity mainly targets expanding its markets and increasing its Medicaid membership. A few buyouts like that of Community Medical Holdings, MHM Services and Fidelis Care have helped it boost its portfolio and strengthen capabilities. Last July, the company struck a joint venture with Ascension to establish a Medicare Advantage plan, which will be operational in multiple geographies beginning 2020.

Moreover, Centene’s purchase of WellCare Health Plans, Inc. WCG is on track and is expected to close by the first half of 2020. The combination of these two entities will lead to a wider scale and diversification with more than 12 million Medicaid and around 5 million Medicare members. It is presumed that this new company will have estimated pro forma 2019 revenues in excess of $100 billion and an EBITDA of $5 billion. The deal is projected to generate adjusted earnings per share accretion of approximately mid-single digits during the year two following its completion with long-term growth opportunities and cost-reduction benefits across markets and products.

The company’s long-term growth rate is pegged at 14.2%, higher than its industry's average of 14%.

Shares of this Zacks Rank #3 (Hold) company have lost 35.9% in a year's time, wider than its industry’s decline of 13.4%.



Stocks to Consider

Investors interested in the medical sector can take a look at some better-ranked stocks like Molina Healthcare, Inc MOH and Humana Inc. HUM. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Molina offers Medicaid-related solutions to meet the health care needs of low-income families and individuals. In the trailing four quarters, the company came up with average beat of 66.9%. The stock sports a Zacks Rank #1.

Humana works as a health and well-being company in the United States. The company has a Zacks Rank of #2 (Buy) and pulled off average positive surprise of 7.79% in the last four quarters.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

AstraZeneca's Farxiga Gets Fast Track Tag for Heart Failure

Posted Mon Sep 16, 10:43 am ET

by Zacks Equity Research

AstraZeneca PLC AZN announced that the FDA has granted a Fast Track designation to its SGLT2 inhibitor Farxiga (dapagliflozin) for reducing the risk of cardiovascular (CV) death or worsening of heart failure in heart failure patients.

The blockbuster drug, approved to treat type II diabetes (T2D), is being evaluated in two phase III studies, namely DAPA-HF and DELIVER to see its effect in adults suffering heart failure with reduced ejection fraction (HFrEF) and preserved ejection fraction (HFpEF), respectively.

The FDA provides a Fast Track designation to help development and faster review of drugs, which treat serious and unmet medical conditions.

Last month, the FDA granted a Fast Track designation to Farxiga for chronic kidney disease (CKD). The drug is being evaluated in the phase III DAPA-CKD study to see its effect on renal outcomes and CV mortality in patients suffering CKD with or without type-2 diabetes (T2D).

All these studies are part of AstraZeneca's DapaCare clinical program to explore the CV, metabolic and renal profile of Farxiga in T2D patients. Farxiga is also being developed to treat patients with heart failure (HFrEF and HFpEF) in DETERMINE study.

Shares of AstraZeneca have rallied 12.6% so far this year against the industry’s decline of 1.9%.



We remind investors that last month, AstraZeneca released positive results from the DAPA-HF study on Farxiga. The study showed that Farxiga met the primary composite endpoint with a statistically-significant and clinically-meaningful reduction in CV death or the worsening of heart failure compared to placebo. The study was conducted in patients with HFrEF who are on standard of care treatment including those with and without T2D.

Also, in the same month, the European Commission approved a label expansion for Farxiga to include positive CV outcomes and renal data from the phase III DECLARE-TIMI 58 study on adults with T2D. A similar filing is under review in the United States. The DECLARE study is also part of the extensive DapaCare clinical program.

Farxiga/Forxiga, a key top-line driver of AstraZeneca, generated sales of $726 million in the first half of 2019, representing 19% growth at constant exchange rates. Farxiga enjoys global leadership with voluminous market share.

Other SGLT2 inhibitors available in the market are Johnson & Johnson’s JNJ Invokana and Lilly’s LLY Jardiance, Synjardy (a fixed dose combination of Jardiance and metformin) and Glyxambi (a fixed dose combination of Jardiance and Tradjenta).

Zacks Rank & Key Pick

AstraZeneca currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the large cap pharma sector is Bristol-Myers Squibb Company BMY, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bristol-Myers’ earnings estimates have moved 2.9% north for 2019 and 21.5% for 2020 over the past 60 days.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Alaska Air Group (ALK) Reports Impressive August Traffic

Posted Mon Sep 16, 10:39 am ET

by Zacks Equity Research

Alaska Air Group, Inc. ALK reported traffic statistics for August. Traffic, measured in revenue passenger miles (RPMs), increased 4.6% to 5.19 billion.

Also, on a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 4.2% to 6.04 billion. With traffic growth outpacing capacity expansion, load factor or percentage of seats filled by passengers improved 30 basis points (bps) to 86%.

In the first eight months of 2019, the carrier generated RPMs of 37.66 billion (up 1.6% year over year) and ASMs of 44.64 billion (up 1.3% year over year). As a result, load factor increased 30 bps to 84.4%.

Alaska Air Group recently revised its guidance for third-quarter unit revenues and fuel costs. The carrier expects revenue per available seat mile (RASM) to rise in the 3-5% range year over year (the earlier outlook projected an increase in the 2-5% range). Additionally, economic fuel cost is now anticipated to be $2.15 per gallon compared with the earlier forecast of $2.21.


Zacks Rank & Key Picks

Alaska Air Group carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Controladora Vuela Compania de Aviacion, S.A.B. de C.V. VLRS, Copa Holdings, S.A. CPA and Allegiant Travel Company ALGT. While Controladora Vuela and Copa sport a Zacks Rank #1 (Strong Buy), Allegiant carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Controladora Vuela, Copa and Allegiant have rallied more than 94%, 25% and 50% so far this year, respectively.

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