Top US Companies To Watch For 2016

Anthem (ANTM) has suedExpress Scripts, alleging that the pharmacy benefits manager charged too much for the drugs it provided. Citigroup’sGaren Sarafian explains:

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Anthem filed a suit intraday today against its pharmacy benefit manager Express Scripts for what it believes is higher than competitive benchmark pricing that the company has previously claimed to be $3 billion annually. The complaint also seeks to recover damages related to operational issues and for a declaration of Anthems right to terminate its contract. This has been somewhat expected as neither company has emphasized any progress at recent investor conferences and meetings, where the introduction of a third party to intervene was the natural next step…

Key to the dispute is the definition of good faith. Anthem and Express Scripts are in midst of a 10 year contract with built-in price checks, not uncommon in large contracts much less one that is a decade in duration. Anthem has had at least one successful price check circa 2012/2013, but now does not believe Express Scripts has engaged in good faith negotiations for more than a year, or since about March 2015. For comparison, Express Scripts on their latest Feb. 17th earnings call stated they remain fully committed to good faith negotiations Within the framework of our 2009 contract. Also worth highlighting is the near $5 billion payment made by Express Scripts to then WellPoint at that time to obtain and serve this client. We believe this transfer of economic value is what will be deliberated in the courts, among other issues.

Top US Companies To Watch For 2016: AbbVie Inc.(ABBV)

 

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceutical products worldwide. The company offers HUMIRA, a biologic therapy administered as a subcutaneous injection to treat autoimmune diseases; IMBRUVICA an oral therapy for the treatment of chronic lymphocytic leukemia; and VIEKIRA PAK, an interferon-free therapy, with or without ribavirin, for adults with genotype 1 chronic hepatitis, including those with compensated cirrhosis. It also provides Kaletra, an anti-HIV-1 medicine used with other anti-HIV-1 medications as a treatment that maintains viral suppression in HIV-1 patients; Norvir, a protease inhibitor indicated in combination with other antiretroviral agents to treat HIV-1; and Synagis to prevent respiratory syncytial virus infection in high risk infants. In addition, the company offers AndroGel, a testosterone replacement therapy for males diagnosed with symptomatic low testosterone; Creon, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid to treat hypothyroidism; and Lupron, a product for the palliative treatment of prostate cancer, and endometriosis and central precocious puberty, as well as for the treatment of patients with anemia. Further, it provides Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinsons disease; Sevoflurane, an anesthesia product for human use; TriCor, Trilipix, and Niaspan treat metabolic conditions characterized by high cholesterol and/or high triglycerides; and Zemplar to treat secondary hyperparathyroidism. The company sells its products to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies, and independent retailers from its distribution centers and public warehouses. AbbVie Inc. has strategic collaboration with C2N Diagnostics, Calico Life Sciences LLC, Infinity Pharmaceuticals, Inc., Ablynx NV, Galapagos NV, and Alvine Pharmaceuticals, Inc. The company was incorporated in 2012 and is based in North Chicago, Illi! nois.

Advisors’ Opinion:

  • [By Ben Levisohn]

    Gilead will announce its 2Q Earnings and hold its conference call on Monday, July 25…Gilead is driven by Hepatitis C virus and HIV sales. We see HCV sales ~$200M below consensus due to continued pricing pressure globally and lower market share in Europe. The pricing pressure comes from a more negative mix shift in the US from greater Veterans Administration volumes (discounts ~75%) and 8 week usage which is 33% less than a full course of drug, a full quarter of the 32% price cut in Japan vs. one month in 1Q16, and a negative mix shift in Europe to lower-priced countries in Southern Europe. Lower market share in Europe is a result of aggressive price competition from AbbVie (ABBV)…

  • [By Ben Levisohn]

    The main conclusions we draw from the abstracts (lacking information about late breakers) is that Gileads dominance of HCV seems secure for the immediate future, with sof/vel (sofosbuvir/velpatasvir) showing impressive efficacy in difficult-to-treat patient subsets. Competitors have early data for their new HCV development efforts (Merck (MRK) [MP], Johnson & Johnson (JNJ) [OP], AbbVie (ABBV)) but will not present new clinical data at this meeting.

  • [By Teresa Rivas] M. Scott Brauer for The Wall Street Journal

    AbbVie (ABBV) is lower Friday, following a downgrade from BMO Capital Markets.

    Analyst Alex Arfaei cut his rating on the stock from Outperform to Market Perform, and lowered his price target from $70 to $66.

    Details from the note:

    During the past couple of months, we had become increasingly concerned about AbbVie’s major growth drivers, and the company’s R&D day did not alleviate our concerns. AbbVie is gradually diversifying from Humira; however, some of the ASCO updates after the R&D day, along with ongoing positive updates from Lilly’s immunology franchise (Taltz and Baricitinib) and a recent meeting with Pfizer’ President of Global Established Products, have increased our concerns regarding the longer-term growth prospects of AbbVie’s immunology franchise, particularly Humira. We believe that AbbVie’s management set expectations too high for its major franchises, and just as it eventually acknowledged the competitive realities of Hep-C, it will likely have to do so with other key franchises. We believe that Baricitinib will be a strong competitor for Humira. Longer term we now expect up to 30-50% price reduction in the anti-TNF market. Given the launch lead of IL-17s, we do not see Risankizumab as a transformational therapy in psoriasis. In oncology, we do not see Rova-T as a multibillion dollar drug given the rapidly emerging competition from the IOs and other targeted agents in SCLC. While we still see Imbruvica as a ~$5B franchise by 2020, we now have increased uncertainty about its longer term prospects in hematologic malignancies as the IO’s and CAR-Ts emerge.

    The shares are down 0.2% to $60.61 in recent trading.

Top US Companies To Watch For 2016: Graham Corporation(GHM)

 

Graham Corporation, together with its subsidiaries, engages in the design, manufacture, and sale of heat transfer and vacuum equipment for the chemical, petrochemical, refining, energy, defense, and electric power generating industries worldwide. The company offers heat transfer equipment, including surface condensers, Heliflows, water heaters, and various types of heat exchangers; and vacuum equipment consisting of steam jet ejector vacuum systems and liquid ring vacuum pumps. It also services and sells spare parts for its equipment; and supplies components used inside reactor vessels and outside containment vessels of nuclear power facilities. The company sells its products directly, as well as through independent sales representatives. Graham Corporation was founded in 1936 and is headquartered in Batavia, New York.

Advisors’ Opinion:

  • [By Monica Gerson]

    Graham Corporation (NYSE: GHM) is expected to report its quarterly earnings at $0.12 per share on revenue of $23.54 million.

    Heico Corp (NYSE: HEI) is estimated to post its quarterly earnings at $0.54 per share.

Top 5 Rising Stocks To Own Right Now: Square, Inc.(SQ)

 

Square, Inc. develops and provides point-of-sale software worldwide. It provides Square Register, a point-of-sale system that takes care of digital receipts, inventory, and sales reports, as well as provides analytics and feedback. The company serves big and small businesses from bakeries to retailers. Its product, Square Register, is available in the App Store and on Google Play, and it is designed to run on a smartphone or tablet, and on counter. Square, Inc. is headquartered in San Francisco, California.

Advisors’ Opinion:

  • [By Lisa Levin]

    Square Inc (NYSE: SQ) shares dropped 19 percent to $10.58. Square reported a loss of $(0.29) per share and sales of $379 million. Wedbush downgraded Square from Neutral to Underperform.