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Here are highlights from Friday's Analyst Blog:
AstraZeneca's Pipeline Must Deliver
We currently rate shares of AstraZeneca (NYSE: AZN | Quote | Chart | News | PowerRating) a Hold with a $47 price target. The company is facing a number of challenges as it enters 2009, most notably generic competition to Toprol-XL, Nexium, Casodex and Pulmicort.
The just-announced increase to the cost-cutting program will aid EPS in the near-term, but we do not believe this will be enough to compensate for continued revenue deterioration beyond 2010. Atacand and Arimidex will both be subject to generic competition in 2010, then Seroquel and Symbicort lose U.S. patent protection in 2011 and 2012, respectively. This puts significantly more pressure on the company to commercialize its late-stage pipeline.
Darden Increases Dividend
On June 23, 2009, Darden Restaurants, Inc. (NYSE: DRI | Quote | Chart | News | PowerRating) increased its quarterly dividend by 25% to $0.25 per share, resulting in an annual dividend of $1.00 per share. Previously, the company had paid a quarterly dividend of $0.20 per share. The increased dividend would be paid on August 3, 2009 to shareholders as of July 10, 2009.
In another move to increase shareholders' return, the company repurchased 0.4 million shares in 4Q09, the most recently reported quarter. In fiscal 2009, Darden spent $145 million to buyback 5.1 million shares. Since the commencement of the share repurchase program in December 1995, the company has repurchased over 152 million shares for an aggregate amount of $2.92 billion under its authorization of 162.4 million shares.
Chas. Schwab to Bolster Growth
On June 25, 2009, Charles Schwab Corporation (Nasdaq: SCHW), the largest independent investment advisor in the U.S., disclosed a series of new initiatives that will help the company grow significantly by managing costs and improving their efficiency.
SCHW's client-advisor relationship has been facing significant dilemmas due to the ongoing troubled market condition. And, as there is a need for greater efficiency in their businesses, the current clients require more involvement from their advisors.
Retail Small-Cap Spotlight: SMRT
The Retail Small Cap Spotlight will highlight small retailing stocks with upside potential that are flying under the radar of the analyst community.
Today, we are looking at small cap retailer Stein Mart (Nasdaq: SMRT). We think Stein Mart could be good way to play the consumer trading down, which we expect to last much longer than most market observers.
Stein Mart operations combine the traditional department or specialty store with an off-priced business. We think this strategy to offer higher quality goods at lower prices is ideal for the current economic environment.
Shire: New Products Filling Holes
While the loss of exclusivity of Shire's (Nasdaq: SHPGY | Quote | Chart | News | PowerRating) Adderall XR will result in revenue falling in 2009 relative to 2008, we believe Vyvanse will be able to continue to post strong sales growth due to its strong differentiating characteristics.
We believe the drug is much more than just an Adderall XR substitute, which should allow continued share gains despite significant generic competition. The adult indication should provide an additional catalyst to growth.
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