The Zacks Analyst Blog Highlights: Pfizer, Teva, Mylan, Actavis and ProAssurance
Zacks Equity Research
For Immediate Release
Chicago, IL March 7, 2013 – 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 includePfizer Inc. (PFE), Teva (TEVA), Mylan (MYL), Actavis (ACT) and ProAssurance Corp. (PRA).
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Here are highlights from Wednesday’s Analyst Blog:
Patent Relief for Pfizer
Pfizer Inc. (PFE) recently received some good news with the US Patent & Trademark Office granting a reissue patent for Pfizer’s pain drug, Celebrex. Celebrex is approved for the relief of the signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, and the management of acute pain in adults.
The reissue patent will provide coverage up to Dec 2, 2015 including 6 months of pediatric exclusivity. The basic patent was scheduled to expire on May 30, 2014 including 6 months of pediatric exclusivity.
Pfizer, which is facing patent challenges from several companies for Celebrex, immediately put into action plans to delay the entry of generic competition. The company has filed patent infringement lawsuits against generic players – Teva (TEVA), Mylan (MYL), Actavis (ACT), Lupin and Apotex – in the US District Court for the Eastern District of Virginia.
All these companies are seeking US Food and Drug Administration (:FDA) approval for their generic versions of the drug. The companies are looking to launch their generic versions after May 30, 2014 and before Dec 2, 2015.
Our Take
We are positive on the granting of the reissue patent which buys time for Pfizer to generate additional sales from Celebrex before generics enter the market. With Lipitor losing exclusivity, Celebrex was among the top contributors to US sales in 2012. Celebrex sales increased 8% to $2.7 billion in 2012. In the US alone, Celebrex sales in 2012 were $1.7 billion, up 9%.
Pfizer currently carries a Zacks Rank #3 (Hold). While near-term earnings will be driven by cost cutting efforts and share repurchases, longer-term growth will depend on the success of drug development. The company’s pipeline needs to deliver given the Lipitor loss of exclusivity and the upcoming loss of exclusivity on additional products in the next few years.
Meanwhile, both Teva and Actavis are Zacks Rank #3 stocks. However, Mylan is a Zacks Rank #2 stock (Buy).
ProAssurance Raised to Outperform
On Mar 5, 2013, we upgraded our recommendation on ProAssurance Corp. (PRA) to Outperform based on strong credit ratings, prudent capital management and inorganic growth.
Why the Upgrade?
Despite a soft cycle in the medical liability business, ProAssurance has significantly expanded its geographic footprint through successful acquisitions and integration of companies. The financial size and strength have helped this Zacks Rank #3 (Hold) stock to become an attractive acquirer. Furthermore, its commitment to local market needs and personal service differentiates the company from its competitors, both in organic growth and acquisition opportunities.
Prudent capital management is another key strength for ProAssurance, which is reflected in the low-risk balance sheet and healthy loss reserves. All of the subsidiaries of ProAssurance exceed the minimum risk-based capital (RBC) requirements specified by National Association of Insurance Commissioners (:NAIC).
Further, the company deploys capital in an effective manner mainly through its stock buyback program and dividend payment. The company deployed $38.4 million on quarterly dividends in 2012, along with a special dividend of $154.1 million in Dec 2012. Moreover, the company authorized a 2:1 stock split in Dec 2012, which will double the total dividend payment in the future due to the twofold increase in outstanding shares.
Moreover, ProAssurance enjoys Insurer Financial Strength (:IFS) rating of “A” from both A.M. Best and Fitch. The ratings reflect the company’s high claims paying ability, financial strength and ability to meet its debt obligations.
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