Healthcare Review: Cerner, Zogenix, ResMed, Healthways, Immunogen Print E-mail
By Staff and Wire Reports   
Friday, 25 October 2013 13:50
U.S. stocks edged up on Friday with technology shares leading the gains on strong results, though the market's rally appeared to be running out of steam with indexes near all-time highs. The S&P 500 has gained 23 percent so far this year, just shy of the 23.5 percent jump it posted in 2009. Surpassing the 2009 record would give the index its biggest annual gain in a decade. The benchmark is on track for its third-straight week of gains.

Microsoft Corp was the leading point gainer on the Dow, Nasdaq and S&P 500 as profit and revenue reported late Thursday exceeded expectations, sending shares up 5.5 percent to $35.59. posted its largest daily gain since April 2012 after the online retailer reported stronger-than-expected sales growth. Shares jumped 8.3 percent to $359.74 after hitting a record $368.40.

Goldman is sticking with its Buy rating on Cerner ($CERN -2.4%) despite consecutive quarters of below-consensus top-line results. "CERN's Q4 bookings guide of $1.0-$1.1B comfortably captured the Street and should diminish concerns for potential deceleration in bookings," analyst Robert Jones notes, adding that Goldman "expects [CERN's] several high-profile partnerships to lend support to more EMR replacement/RCM contract wins and assist in further distancing [the company] from competition in its population health capabilities. "Price target is $63, which, after today's losses, represents an 11.7% upside.

As expected, the FDA approves Zogenix's (ZGNX +38.4%) Zohydro ER. The product is the "first FDA-approved single-entity (not combined with an analgesic such as acetaminophen) and extended-release hydrocodone product." Interestingly, Zohydro's Schedule II classification looks like a moot point now that the regulator is looking to reclassify all hydrocodone-based painkillers as Schedule II substances.

Deutsche's David Low has reconsidered his position on ResMed ($RMD -10.6%) following the company's FQ1 report.  "While the medium term outlook remains positive, supported by HST, positive mix shift and the aggressive roll-out of new products ... RMD seems to have suffered greater market share pressure than expected," Low says, cutting the shares to Hold from Buy.Low's Q1 highlight: "Continued lift in gross margins in the face of increased price pressure. "Rationale for 3-4% EPS cut: "Weaker sales forecasts reflecting the increased market share pressure evident in Q1."

It's shaping up to be a rough day for shares of Healthways ($HWAY), which are down some 18% premarket, tracking Thursday's AH losses. Q3 results missed estimates, revenue came in flat, and net income plunged 64% Y/Y to $1.8M.HWAY cut its FY14 EPS and revenue guidance to -$0.10-0.04 and $665-675M, respectively, from $0.18-0.28/share on revenue of $710-750M. The Street expects $0.21/share on sales of $708.27M."The majority of the guidance change results from a much lower number of risk lives available in 2013 for our total population management services to health systems than was forecast in our previous guidance," CEO Ben Leedle says.

Immunogen ($IMGN) rises 5.8% after the company's Q1 loss comes in narrower than anticipated. IMGN updated its pipeline in the PR. The company notes Roche's reported YTD Kadcyla sales of $168M and reminds investors that IMGN "receives and recognizes royalties on Kadcyla sales the quarter after the quarter in which Roche records the sales. "The company says it will have "the data needed to make IMGN901 next-step decisions by mid-2014" (Phase 2 testing for small-cell lung cancer).IMGN289 to begin patient dosing "this quarter."IMGN529 clinical data expected next year.

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