For Immediate Release
Chicago, IL – June 7, 2023 – Zacks Equity Research shares Novo Nordisk NVO as the Bull of the Day and Golden Entertainment GDEN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Biogen BIIB and Denali Therapeutics' DNLI.
Here is a synopsis of all four stocks:
Bull of the Day:
Novo Nordisk, a global healthcare company, is a leader in the worldwide diabetes market. The company operates through two segments: Diabetes and obesity care and Biopharmaceuticals.
Analysts have recently taken a bullish stance on the company’s earnings outlook, helping land the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
Aside from the improved earnings outlook, let’s look at several other aspects of NVO shares.
For those seeking dividends, Novo Nordisk has that covered; NVO shares currently yield 1.1% annually, with the company’s payout sitting at a sustainable 45% of earnings.
While the current yield is below the Zacks Medical sector average, the company’s 9.4% five-year annualized dividend growth rate helps bridge the gap.
Shares may not entice value-focused investors, with the current 31.1X forward earnings multiple sitting on the higher end of the spectrum and well above the 24.5X five-year median. The stock carries a Style Score of “D” for Value.
Still, investors have had little issue forking up the premium for NVO shares given the company’s growth profile, with earnings forecasted to climb nearly 50% in its current fiscal year (FY23) and an additional 17% in FY24.
The stock carries a Style Score of “A” for Growth.
Keep an eye out for the company’s upcoming quarterly report expected on August 2nd; the Zacks Consensus EPS Estimate of $1.29 indicates a sizable 53% uptick in earnings year-over-year. In addition, it’s worth noting that the quarterly EPS estimate has been revised nearly 12% higher just since March.
Further, the company is forecasted to post $8.3 billion in quarterly revenue, reflecting more than 40% improvement from the year-ago period. The quarterly sales estimate has been revised nearly 15% higher since March.
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Novo Nordisk would be an excellent stock for investors to keep on their watchlists, as displayed by its Zack Rank #1 (Strong Buy).
Bear of the Day:
Golden Entertainment is a diverse gaming company offering casino, distributed gaming, and lottery services. The company's gaming divisions include Golden Casino Group, PT's Entertainment Group, and Golden Route Operations.
Analysts have slashed their earnings expectations across the board for Golden Entertainment as of late, pushing the stock into a Zacks Rank #5 (Strong Sell).
Let’s take a closer look at how the company currently stacks up.
Golden Entertainment has struggled to exceed quarterly estimates, falling short of earnings and revenue expectations in back-to-back quarters. Over the last four quarters, the average EPS surprise is a negative -26%.
Shares faced selling pressure post-earnings following its latest release but have since rebounded, as the chart below illustrates.
Regarding the latest quarter, GDEN fell short of earnings expectations by roughly 20%. Quarterly revenue totaled $278 million, marginally below expectations and essentially flat year-over-year. Below is a chart illustrating the company’s revenue on a quarterly basis.
Shares presently trade at a 1.2X forward price-to-sales ratio, a few ticks above the 0.8X five-year median and below the Zacks Consumer Discretionary average. The stock carries a Style Score of “B” for Value.
The company is forecasted to witness a slowdown in growth in its current fiscal year, with the $1.76 Zacks Consensus EPS estimate indicating a 30% year-over-year pullback in earnings. Still, growth resumes in FY24, with estimates calling for a slight uptick in earnings.
Negative earnings estimate revisions from analysts and weak quarterly results paint a challenging picture for the company’s shares in the near term.
Golden Entertainment is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook over the last several months.
Biogen (BIIB) to End One of Two Parkinson's Studies
Biogen announced that it is discontinuing one of the two studies on its and partner Denali Therapeutics' small molecule LRRK2 inhibitor, BIIB122, for Parkinson's disease.
Biogen's clinical development program on BIIB122 initially comprised two late-stage studies. The first study was a phase IIb LUMA study in participants with early-stage Parkinson's disease while the second study was a phase III LIGHTHOUSE study in patients with Parkinson's disease associated with LRRK2 pathogenic mutations. LRRK2 mutations are one of the most common genetic drivers of Parkinson's disease. While the LUMA study began in May 2022, the LIGHTHOUSE study commenced in September 2022.
Biogen has now decided to discontinue the LIGHTHOUSE study as it believes the study is complicated and will take several years to be completed. The LIGHTHOUSE study is expected to be completed in 2031, when the competitive landscape may also become intense. The protocol of the LUMA study will be amended to now include only some eligible patients with a LRRK2 genetic mutation in addition to continuing to enroll eligible patients with early-stage idiopathic Parkinson's disease. Biogen will now focus on the LUMA study on BIIB122. Participants currently enrolled in the LIGHTHOUSE study can now join the LUMA study.
Biogen said these changes in BIIB122's clinical program were not based on safety or efficacy data from any studies of the candidate.
Biogen's stock has risen 9.1% this year so far against a decrease of 7.6% for the industry.
Biogen collaborated with Denali Therapeutics in August 2020 to co-develop and co-commercialize BIIB122 for Parkinson's disease. In 2023, Biogen licensed Denali's ATV-enabled anti-amyloid beta program.
Biogen decided to re-align its Parkinson's disease program on BIIB122 as part of its ongoing R&D prioritization initiative. Biogen is focusing on R&D activities with the highest probability of success. It can accelerate, terminate, divest, or partner certain programs while continuing to evaluate new internal and external opportunities within its key therapeutic areas of focus and adjacencies, as part of the R&D initiative.
Zacks Rank & Stocks to Consider
Biogen currently has a Zacks Rank #3 (Hold).
One better-ranked large drugmaker is Novo Nordisk, which has a Zacks Rank of #1 (Strong Buy), Novartis has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Estimates for Novo Nordisk's 2023 earnings per share have increased from $4.51 to $5.07 over the past 30 days. Estimates for 2024 have jumped from $5.26 per share to $5.91 in the same timeframe. Novo Nordisk's stock has risen 16.2% this year so far.
Novo Nordisk beat earnings expectations in two of the trailing four quarters, met estimates in one and missed in the other. The company delivered a four-quarter earnings surprise of 0.35%, on average.
Estimates for Novartis' earnings per share have increased from $6.56 to $6.67 over the past 60 days, while those for 2024 have gone up from $7.05 per share to $7.22 per share. Novartis' stock has risen 9.5% this year so far.
Novartis beat earnings expectations in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.15%, on average.
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