The Zacks Analyst Blog Highlights: Dr. Reddy's Laboratories, Eli Lilly, Johnson & Johnson, Pfizer and AstraZeneca
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The Zacks Analyst Blog Highlights: Dr. Reddy's Laboratories, Eli
Lilly, Johnson & Johnson, Pfizer and AstraZeneca
CHICAGO, Feb. 7, 2012 /PRNewswire/ -- 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
includeDr. Reddy's Laboratories (NYSE: RDY), Eli Lilly & Co. (NYSE:
LLY), Johnson & Johnson (NYSE: JNJ), Pfizer Inc. (NYSE: PFE) and
AstraZeneca (NYSE: AZN).
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Profit from the Pros newsletter: http://at.zacks.com/?id5513 
Here are highlights from Monday's Analyst Blog:
Dr. Reddy's Going Strong
Dr. Reddy's Laboratories (NYSE: RDY) reported third quarter fiscal
2012 earnings per American Depositary Share (ADS) of 60 cents,
significantly above the year-ago earnings of 30 cents per ADS. Higher
revenues boosted earnings.
Quarter at a Glance
The company reported revenues of $522 million during the quarter,
reflecting a year-over-year increase of 46%. Dr. Reddy's reports
revenues under two segments - Global Generics and Pharmaceutical
Services & Active Ingredients (PSAI). While revenues at the Global
Generics segment jumped 57% to $402 million, PSAI revenues climbed 12%
to $105 million during the quarter.
Generics revenues soared 133% in North America, 15% in Russia and
other CIS (Commonwealth of Independent States) markets, 14% in Europe
and 11% in India. Growth was mainly driven by the launch of a generic
version of Eli Lilly & Co.'s (NYSE: LLY) Zyprexa (olanzapine) 20 mg.
Dr. Reddy's currently has 180-day marketing exclusivity for the
generic drug. Since generic Zyprexa was launched in the third quarter
of fiscal 2012, the exclusivity runs till the fourth quarter of fiscal
2012. The company expects the Generic segment revenues to benefit from
the generic launch even in the fourth quarter but not as much as in
the third quarter.
Additionally, new product launches aided Generic segment revenues and
the Pharmaceutical Services segment mainly contributed to PSAI
revenues. Both the segments gained from exchange rate fluctuation.
Gross margin at Dr. Reddy's inched up from 59% in the year-ago quarter
to 60% in the reported quarter. Gross margin improved due to higher
revenues and exchange rate fluctuation.
Selling, general and administration (SG&A) expenses amounted to $145
million, reflecting an increase of 20%. Higher freight charges,
increased manpower and exchange rate fluctuation led to the rise in
Increased research and development (R&D) activities led to a 16% surge
in R&D expenses, which came in at $29 million.
During the quarter, Dr. Reddy's launched 33 new generic products,
filed 16 new product registrations, and 7 drug master files (DMF)
globally. The total number of abbreviated new drug applications
(ANDAs) awaiting US Food and Drug Administration (FDA) approval were
79 at the end of the quarter. Of the 79 ANDAs, 40 were Para IV filings
and 10 are first-to-file.
We currently have a Neutral recommendation on Dr. Reddy's. The stock
carries a Zacks ?2 Rank (Buy rating) in the short-run. We expect
generic Zyprexa to continue contributing to the company's revenues,
given the drug's exclusivity till the fourth quarter of fiscal 2012.
Moreover, we believe Dr. Reddy's is in a strong position to benefit
from the huge potential presented by the US generics market, as quite
a few blockbuster drugs such as Johnson & Johnson's (NYSE: JNJ)
Concerta and Pfizer Inc.'s (NYSE: PFE) Lipitor have lost patent
exclusivity and more drugs are slated to go off-patent in the coming
AstraZeneca Beats by a Whisker
AstraZeneca (NYSE: AZN) reported fourth-quarter 2011 core adjusted
earnings of $1.61 per American Depositary Share ("ADS"), a penny above
the Zacks Consensus Estimate of $1.60. Earnings were up 12% (at
constant exchange rates CER) year over year, benefiting from share
repurchases, lower tax rate and lower net finance expense.
AstraZeneca's quarterly revenues remained flat (at CER) year over year
at $8.7 billion, owing to intense generic competition and government
price interventions. However, revenues were just above the Zacks
Consensus Estimate of $8.6 billion.
Full year earnings came in at $7.28 per share, ahead of the Zacks
Consensus Estimate of $7.25 and 7% (at CER) above the year-ago
earnings. Full year revenues fell 2% (at CER) to $33.6 billion, just
above the Zacks Consensus Estimate of $33.5 billion.
All growth rates mentioned below are on a year-on-year basis and at
constant exchange rates.
Neutral on AstraZeneca
We currently have a Neutral recommendation on AstraZeneca. The stock
carries a Zacks ?3 Rank (Hold rating) in the short run. Even though we
are encouraged by the strong cardiovascular franchise at AstraZeneca
and the company's focus on the high-potential emerging markets, we
remain concerned about the generic competition faced by its key
products. The company is looking to lessen the impact of
genericization by reducing its cost structure through restructuring
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