CHICAGO, July 6, 2011 /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 include: United Parcel Services (NYSE:
UPS), FedEx Corporation (NYSE: FDX), Bayer (OTC:
BAYRY) , Johnson & Johnson (NYSE: JNJ) and
Sanofi-Aventis (NYSE: SNY).
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Here are highlights from Tuesday's Analyst Blog:
UPS Raises Freight Rate
United Parcel Services (NYSE: UPS) has increased its
freight rates by 6.9% on non-contractual shipments. The increase is
effective August 1, in the U.S.,
Canada and Mexico.
The company offers a variety of less-than-truckload (LTL) and
truckload (TL) services to customers through its Freight segment,
which remains a significant revenue contributor. The gradually
improving economy is supporting the broader market and the company
remains well positioned to benefit from firming industrial
fundamentals and LTL industry pricing discipline.
Continued focus on improving pricing signifies UPS' initiative
to substantially better its earnings power over the next several
years. In early 2011, the company increased its general rate by
4.9% for ground packages, air express and U.S. origin international
shipments in an effort to solidify revenue generation along with
yield expansion in the three product lines.
Likewise, the current price hike should also support UP
long-term goal of robust revenue and margin expansion and earnings
improvement.
Apart from the pricing improvements, United Parcel is undergoing
a series of initiatives that is expected to deliver industry
leading margin and earnings growth over the long term. Key among
these is a renewed focus on yield improvement in the U.S. Domestic
Package division.
Other drivers include increased export volumes, operating
leverage benefits on 35–40% capacity expansion at Worldport and the
flexible Teamster contract. Further, the company continues to
expand its footprint in emerging markets such as the health care
end market, which could be a larger contributor to growth in the
future.
We believe the growth initiatives will aid the company to deal
with near-term headwinds such as surging fuel prices, substantial
capital investment and high labor unionization. These would give
UPS a competitive advantage over its peers like FedEx
Corporation (NYSE: FDX).
We are currently maintaining our long-term Neutral
recommendation on UPS. The stock retains the Zacks #2 Rank (Buy)
for the short term (1–3 months).
Boost for Bayer-Johnson & Johnson
Recently, the US Food and Drug Administration (FDA) delivered a
huge boost for Bayer (OTC: BAYRY) and partner Johnson
& Johnson (NYSE: JNJ) by clearing their blood-thinner
(anticoagulant) Xarelto (rivaroxaban). The US regulatory body
cleared the drug, which has blockbuster potential, for the
prevention of deep vein thrombosis (DVT) which may cause pulmonary
embolism (PE) in patients undergoing knee or hip replacement
surgery. The blood-thinner is already available in
Europe for the indication.
The current approval will allow Xarelto to be marketed in the US
as a once-daily tablet (10 mg). The tablet is to be taken for 35
days after hip replacement and for 12 days after knee
replacement.
The US approval was based on late-stage studies which showed
that Xarelto was more effective than Sanofi-Aventis' (NYSE:
SNY) Lovenox (enoxaparin). Moreover, Xarelto was found to be as
safe as Lovenox.
While DVT refers to a blood clot in a major vein and usually
develops in the legs, PE refers to an obstruction of a blood vessel
in the lungs, mostly because of a blood clot. The clot causes the
blockage of a coronary artery.
Xarelto is the only oral anticoagulant to be approved by the FDA
for the prevention of VTE in patients undergoing operation for knee
or hip replacement. The approval of Xarelto for the indication will
boost the partners' top line. Moreover, it will prevent the
development of blood clots post operation in patients undergoing
knee or hip replacement surgery.
According to data from the American Academy of Orthopedic
Surgeons more than 800,000 patients in the US undergo such
operations annually. However these exercises involve the risk of
patients developing DVT which may result in a PE, thereby blocking
blood flow which may lead to serious consequences.
Our Recommendation
Currently, we have a Neutral stance on Bayer in the long run.
The company carries a Zacks #3 Rank (Hold rating) in the short run.
Our position is similar on Johnson & Johnson for the short and
long-term.
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