The Zacks Analyst Blog Highlights: Mylan, AstraZeneca, Novartis, Cephalon and Moody’s Corp

CHICAGO, July 28, 2011 /PRNewswire/ -- 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 include Mylan Inc. (Nasdaq: MYL), AstraZeneca (NYSE: AZN), Novartis (NYSE: NVS), Cephalon (Nasdaq: CEPH) and Moody's Corp. (NYSE: MCO).

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Here are highlights from Wednesday's Analyst Blog:

Mylan Beats on All Fronts

Mylan Inc.'s (Nasdaq: MYL) second quarter 2011 earnings (excluding special items) of 52 cents per share were above the Zacks Consensus Estimate of 45 cents as well as the year-ago earnings of 37 cents per share. Earnings growth was driven by increase in generics revenue and improved gross margins.

Quarter in Detail

Total revenues at Mylan climbed 15% over the prior year to $1.57 billion driven by increased sales of generic drugs and the positive impact of foreign exchange (Fx). Revenues were also ahead of the Zacks Consensus Estimate of $1.50 billion. Total revenues comprise both net revenues and other revenues from third parties.

Mylan reports revenues through two segments: Generics and Specialty.

Generic third party net sales, derived from sales in North America, Europe, Middle East & Africa (EMEA), and the Asia Pacific, climbed about 17% to $1.44 billion in the second quarter of 2011. Third party net sales declined in EMEA on a constant currency basis, but grew in other markets like Asia-Pacific and North America.

Third party net sales in North American markets rose 27.2% to $749.1 million in the reported quarter. The increase was mainly attributable to new product launches, the important ones being the generic versions of AstraZeneca's (NYSE: AZN) Entocort, Novartis' (NYSE: NVS) Femara and Cephalon's (Nasdaq: CEPH) Amrix. Results were aided by the September 2010 purchase of Bioniche Pharma.

Third party net sales from the EMEA market of $378.7 million remained flat year over year, benefiting from the positive impact of Fx. Excluding the positive impact of Fx, sales in EMEA reported a decline, mainly attributable to increased competition resulting in lower pricing and volume in some European markets like Germany and France. However, Italy did well in the quarter.

Third party net sales in Asia-Pacific spurred 17.2% to $310.9 million, driven by increased sales of anti-retroviral finished dosage products and active pharmaceutical ingredients (API) from the company's Indian subsidiary, Matrix. Foreign exchange benefit, to the tune of 10%, was a major catalyst.

Third party net sales from the Specialty division climbed 6.2% to $131.7 million, boosted by pricing benefits of the EpiPen Auto-Injector and volume growth of the Perforomist Solution.

Adjusted gross margins improved to 48% (from 45% in the prior-year quarter), mainly due to new product launches in North America coupled with favorable pricing for EpiPen.

Moody's Tops Zacks Consensus

Moody's Corp. (NYSE: MCO) reported strong second quarter 2011 earnings, beating the Zacks Consensus Estimate of 57 cents by 22 cents (up 38.6%).

Moody's reported pro forma earnings of 79 cents per share, up 61.2% year over year compared with 49 cents per share in the prior-year quarter. The positive surprise was primarily driven by strong revenues, which comprehensively beat the Zacks Consensus Estimate.

Based on the strong results, Moody's revised its full-year earnings per share guidance.

Operating Performance

Operating income, excluding restructuring charges and legacy tax, came in at $270.0 million in the second quarter, up 41.5% year over year. Operating margin increased 470 basis points (bps) on a year-over-year basis to 44.6% in the quarter.

On a dollar basis, operating expenses increased 16.8% year over year to $287.0 million, primarily due to increased headcount, higher incentive compensation and higher technology spending.

Moody's effective tax rate was 27.8% in the quarter versus 31.1% in the prior-year quarter.

Net income increased 56.0% year over year to $181.9 million, with net margin surging 560 bps year over year to 30.1%.

2011 Guidance

Based on better-than-expected second quarter results, Moody's revised its fiscal 2011 guidance. For fiscal 2011, Moody's expects revenue to increase in the low-teens percentage range (previous guidance was in the low-double-digit percentage range). However, expenses are expected to increase in the low-double-digit percentage range.

Management expects operating margin in the range of 38% to 40% and the effective tax rate to be approximately 33.0% for fiscal 2011.

Management intends to continue with its share repurchase program in 2011, subject to available cash flow and other capital allocation decisions.

The company expects diluted earnings per share for fiscal 2011 in the range of $2.38 to $2.48 (previous guidance was $2.22 to $2.32). Currently, the Zacks Consensus Estimate is pegged at $2.34 for fiscal 2011.

Segment wise, global MIS revenue is expected to increase in the low-teens percentage range (previous guidance low-double-digit percentage range) for fiscal 2011. Domestic MIS revenue is expected to increase in the high single-digit percentage range, while overseas revenue is expected to increase in the low-twenties percentage range.

Corporate finance revenue is anticipated to increase in the mid-twenties percentage range. Structured finance revenue is projected to grow in the high-single-digit percentage range.

Revenue from financial institutions is expected to grow in the high-single-digit percentage range, while public, project and infrastructure finance revenue is estimated to be flat on a year-over-year basis.

MA revenue is likely to increase in the low-double-digit percentage range for fiscal 2011. MA revenue in the U.S is expected to increase in the low-double-digit percentage range and in the low-double-digit percentage range outside the U.S.

Revenue growth is expected in the mid-single-digit percentage range for Research, Data and Analytics and in the low- to mid-single-digit percentage range for Risk Management software. Professional services revenue is expected to double in 2011, driven by revenue generated from the acquisition of CSI Global Education in late 2010.

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