Analyst Picks & Pans

Stock Picks: Bristol-Myers Squibb, Clarient, Dell, eBay


Bristol-Myers Squibb Co.: Leerink Swann equity analyst Seamus Fernandez raised a rating on shares of Bristol-Myers Squibb Co. (BMY) to outperform from market perform on June 11. He raised a discounted cash flow-based valuation range on the shares to $28 to $29 from $23 to $24.

On June 10, Bristol-Myers and Pfizer Inc. (PFE) ended a trial of an experimental blood thinner after a panel found "clear evidence" the drug, apixaban, helped reduce stroke risk in patients with irregular heartbeats. The independent review panel deemed apixaban more effective than aspirin in preventing strokes and embolism in patients with atrial fibrillation who can't take blood thinners such as warfarin, the companies said in a joint statement today. The study, dubbed Averroes, was stopped early, after the interim review, and covered 5,600 patients in 36 countries, the companies said in the statement.

The blood thinner is among five drugs for which Bristol-Myers is seeking Food & Drug Administration approval by 2012, the company said in March.

In a note, Fernandez said the rating change on Bristol-Myers was based primarily on "superior pipeline execution." He noted that "in the past week alone, we have … [a] more positive outlook for ipilimumab in metastatic melanoma and Sprycel in second- and front-line chronic myelogenous leukemia [and a] heightened conviction that Apixaban … will be a blockbuster."

The analyst also noted "improved visibility on exciting … oncology pipeline opportunities" for Bristol-Myers.

Clarient Inc.: Morgan Joseph equity analyst Bruce Jackson maintained a buy rating and $4 price target on shares of Clarient Inc. (CLRT) on June 11. Morgan Joseph had initiated coverage on the shares with a buy rating on June 8.

In a note, Jackson said the provider of technologies and services for cancer treatment announced an agreement on June 10 to become the preferred genetic testing lab for Generation Health (GH), a genetic benefit management company partly owned by CVS Caremark (CVS).

Jackson said Generation Health and CVS have a strategic partnership to expand pharmacogenomic (PGx) clinical and testing services for CVS Caremark pharmacy benefit management clients to improve care for patients who either are nonresponsive to their medications or have adverse reactions.

"This agreement expands the potential market for Clarient and ensures reimbursement for all of the diagnostic tests done through GH's nationwide network of payor clients," Jackson wrote.

The analyst also noted Clarient's June 8 announcement that the U.K. Patent Office has granted a U.K. patent on the company's TLE3 biomarker, a marker that may be used to predict which cancer patients will respond favorably to taxane therapy. Also on June 8, Clarient received a Notice of Allowance from the U.S. Patent & Trademark Office for a U.S. patent on the TLE3 biomarker.

Dell Inc.: Kaufman Bros. equity analyst Shaw Wu maintained a hold rating and $14 price target on shares of Dell Inc. (DELL) on June 11.

On June 10, Dell said Chief Executive Officer Michael Dell is in talks with the U.S.Securities & Exchange Commission to settle allegations related to the company's relationship with Intel Corp. (INTC). The settlement would "involve alleged violations of negligence-based fraud provisions of the federal securities laws, as well as other non-fraud-based provisions," Dell said in a statement. The company has also set $100 million aside to settle an existing agency investigation.

Discussions relate to the relationship between Dell, the third-largest computer maker, and Intel, the world's biggest manufacturer of semiconductors, Dell said without elaborating.

On June 10, Dell also delayed filing its quarterly report as it revises financial results to book the $100 million provision.

"Frankly, we are not surprised with this as we have long been a critic of the company's accounting practices and quality of earnings," Wu wrote in a note. "Perhaps this is why Michael Dell recently commented at an investment conference that he had considered taking DELL private."

Wu said he remains concerned with Dell's quality of earnings and believes "a sustainable turnaround could prove difficult."

EBay Inc.: Janney Montgomery Scott equity analyst Shawn Milne maintained a buy rating on shares of online auctioneer eBay Inc. (EBAY) on June 11. He lowered a fair value estimate on the shares to $29 from $30.

Milne said in a note that he was lowering his second-quarter estimates for revenue to $2.14 billion from $2.18 billion, and for earnings per share (EPS) to 37 cents from 38 cents due to the effect of foreign currency translation and expectations for a decline in growth of gross merchandise volume in the U.S. to a range of 2 to 3 percent from 5 to 6 percent. He also lowered his full-year 2010 estimates for revenue to $8.94 billion from $9.07 billion, and for EPS to $1.62 from $1.65.

"[W]e believe eBay's playbook of driving traffic to its top-rated sellers should ultimately improve the buying experience," Milne wrote. He also said an increased merchandise selection and an improved buying experience should stem market share losses and allow the eBay Marketplace to grow "in line with the overall e-commerce market" in 2010, and that he continues to expect strong growth at the company's PayPal electronic payment services unit.


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