CHICAGO, Feb. 1, 2011 /PRNewswire/ -- Zacks.com Analyst
Blog features: Wilmington Trust Corporation (NYSE: WL),
M&T Bank Corporation (NYSE: MTB),
BostonScientific (NYSE: BSX), St. Jude (NYSE: STJ)
and Medtronic (NYSE: MDT).
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Here are highlights from Monday's Analyst Blog:
Wilmington Posts Huge Losses
Wilmington Trust Corporation (NYSE: WL) reported fourth
quarter 2010 net loss of $213.8
million or $2.35 per share
compared with $369.9 million or
$4.06 per share in the prior quarter
and $15.7 million or 23 cents per share in the year-ago quarter. The
results substantially lagged behind the Zacks Consensus Estimate of
a loss of 51 cents per share.
For fiscal year 2010, Wilmington's net loss stood at $738.3 million or $8.45 per share compared with $22.7 million or 33
cents per share in the year-ago period. This also compares
unfavorably with the Zacks Consensus Estimate loss of $6.44 per share.
During the quarter, Wilmington
had announced that it will merge with M&T Bank
Corporation (NYSE: MTB). The stock-for-stock agreement is
valued at about $351 million and is
expected to close by the second quarter of 2011.
Wilmington's results for the
reported quarter were mainly hurt by lower net interest income,
higher non-interest expenses, lower loan growth, increased levels
of nonperforming loans and net charge-offs. However, an increase in
non-interest income was among the positives.
Behind the Headlines
Wilmington's total revenue for
the quarter was $163.6 million, down
3.9% from the prior quarter and 8.2% from the prior-year quarter.
Total revenue also missed the Zacks Consensus Estimate of
$175.0 million.
For full-year 2010, the company's total revenue came in at
$623.8 million compared with
$680.9 million in 2009 and also
missed the Zacks Consensus Estimate of $699.0 million.
Net interest income before provision for loan losses was down
11.5% from the prior quarter and 23.1% from the prior-year quarter
to $59.9 million. Net interest margin
(NIM) fell 45 basis points (bps) from the prior quarter and 79 bps
year over year to 2.33%.
The decline in NIM was the result of a decline in loan balances,
liquidity additions funded by increases in core deposits and
national brokered CD balances and an increase in non-accruing
loans.
Average earning assets rose to $10.25
billion from $9.71 billion in
the prior quarter and $9.95 billion
in the year-ago quarter. However, rate of total earnings assets
declined to 3.22% from 3.69% in the prior quarter and 4.10% in the
year-ago quarter.
Non-interest income improved 1.1% sequentially and 3.4% year
over year to $103.7 million.
Wilmington's total non-interest
expense was $202.6 million, up 32.1%
from the prior quarter and 52.7% from the year-ago quarter. The
increase was mainly attributable to merger-related costs, rise in
the reserve for unfunded loan commitments and legal and other costs
associated with loan workouts, recoveries, and dispositions.
Wilmington's average core
deposit balances were $7.08 billion,
up 2.6% from the prior quarter and 5.0% from the year-ago quarter.
Loan demand continued to be weak, resulting in total average loan
balance to decline 7.4% from the prior quarter and 16.1% from the
year-ago quarter to $7.52
billion.
Our Take
Wilmington has been facing
reduced client activity and higher credit costs due to sluggish
economic recovery. However, its merger with M&T will create a
large lender in the eastern U.S. and the combined entity will
become a large provider of wealth management. Also, the company is
poised to benefit from its geographical expansion.
Wilmington currently retains a
Zacks #4 Rank, which translates into a short-term Sell rating.
However, considering the fundamentals, we maintain a long-term
Neutral recommendation on the shares.
Earnings Preview: Boston Scientific
BostonScientific (NYSE: BSX) is scheduled to release its
fourth quarter and fiscal 2010 earnings on February 1, 2011 after the market close. The
company is expected to report EPS of 10
cents on revenue of $1.989
billion for the quarter, and EPS of 38 cents on revenue of $7.794 million for the fiscal year, according to
the Zacks Consensus Estimate.
Previous Quarter Highlights
Boston Scientific reported an adjusted EPS of 12 cents, surpassing the Zacks Consensus Estimate
of 6 cents. However, earnings were
flat on a year-over-year basis. Adjusted EPS includes intangible
asset impairment charges, restructuring-related charges and
discrete tax items, but excludes after-tax amortization
expense.
Revenues in the third quarter decreased 5% year over year to
$1.92 billion driven by declines in
both domestic (6% to $1.10 billion)
and international markets (5% to $0.81
billion). Revenues according to the Zacks Consensus Estimate
were $1.91 billion.
Defibrillators ship hold and product removal actions slowed the
revenue growth rate by approximately 140 basis points or
$28 million, as compared with the
company's estimate of $44 million due
to proper execution of the recovery plan.
For the fourth quarter of 2010, Boston Scientific expects net
sales and adjusted EPS in the range of $1.93–$2.00 billion and 15–18 cents,
respectively. Given the impact of the first three quarters of 2010,
the company estimates ICD ship hold to have a negative impact of
approximately $190 million for the
full year 2010, compared with the previous estimate of $225 million.
Moreover, for fiscal 2010, Boston Scientific expects sales and
adjusted EPS of $7.7-$7.8 billion and
63-66 cents, respectively.
Agreement of Analysts
Revisions in estimates have been insignificant over the last 30
days. Out of 25 analysts covering the stock, estimates have been
lowered by 2 for both the fourth quarter and fiscal 2010. No upward
revisions in estimates have taken place for these periods.
Pricing pressures especially in the markets of CRM and DES, and
economic uncertainty which impacts elective surgeries have been the
primary challenges in the recent past. Consequently, we expect
Boston Scientific to update the current scenario in both the US and
international market.
We remain concerned about the CRM segment that had witnessed
sales hiccups for its cardiac resynchronization therapy
defibrillators (CRT-Ds) and implantable cardioverter defibrillator
(ICDs) in the first quarter of 2010. Although the resumption of
CRT-Ds and ICDs sales in the second quarter helped the company
regain its competitive edge, we await an update regarding the
current status due to the tough competitive landscape created by
the presence of players such as St. Jude (NYSE: STJ) and
Medtronic (NYSE: MDT) in the ICD market.
In order to diversify its revenue stream, Boston Scientific has
been restructuring its product portfolio, which includes divestment
of its Neurovascular business and significant acquisitions. We
expect more visibility regarding these initiatives during the
quarter.
In January 2011, Boston Scientific
completed enrollment in the EVOLVE trial, which is meant to
evaluate its fourth generation Synergy coronary stent. The study
enrolled 291 patients across 29 sites in Europe, Australia and New
Zealand. With the completion of patient enrolment, the
company might reveal the potential approval date of Synergy.
Our Recommendation
Boston Scientific continues to focus on strategic initiatives to
drive growth and profitability. In this respect, the recent
divestiture of Neurovascular business has been a smart move, which
enabled it to prepay a portion of the debt thereby improving
capital structure. This, in turn, paves the way for other suitable
acquisitions. We are also encouraged to note that the company is
recovering from the ICD shipment issue and anticipates higher
revenues over time as it continues to roll out Cognis and Teligen
around the world.
The acquisition of Asthmatx and Atritech will enable the company
to diversify its revenue stream away from CRM and Cardiovascular
areas. However, we continue to remain concerned with its core
business where Boston is
witnessing significant pricing pressure and loss of market share.
Moreover, economic uncertainty is impacting procedure volume.
We currently have a 'Neutral' recommendation on the stock.
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