Lantheus and NuVasive have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 2, 2023 – Zacks Equity Research shares Lantheus LNTH as the Bull of the Day and NuVasive NUVA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Broadstone Net Lease BNL, NexPoint Residential Trust NXRT and Elme Communities ELME.
Here is a synopsis of all five stocks.
Bull of the Day:
Lantheus is a $5 billion provider of medical imaging technologies (think nuclear agents) for the diagnosis of cardiovascular and other diseases. But their new blockbuster application is in prostate cancer detection.
Here's how the company, which was just added to the S&P 400 Midcap Index in October, describes their business...
We are an established leader in the development, manufacture and commercialization of pioneering diagnostic and therapeutic products and artificial intelligence (AI) solutions. Our broad portfolio features:
**Precision Diagnostics that Find and Follow diseases in non-oncologic conditions
**Radiopharmaceutical Oncology diagnostic and therapeutic products that Find, Fight and Follow cancer
**Strategic Partnerships that empower precision medicine through the use of biomarkers, digital solutions and radiotherapeutic platforms
PYLARIFY® (piflufolastat F 18) injection (also known as 18F-DCFPyL or PyL) is a fluorinated small molecule PSMA-targeted PET imaging agent that enables visualization of lymph nodes, bone and soft tissue metastases to determine the presence or absence of recurrent and/or metastatic prostate cancer.
And here's how they describe the benefits for doctors in diagnosing their patients...
For men with prostate cancer, PYLARIFY combines the accuracy of PET imaging, the precision of PSMA targeting and the clarity of an F 18 radioisotope. This combination brings superior diagnostic performance in assessing patients with suspected metastasis for initial definitive therapy or suspected recurrence based on elevated PSA, allowing you to better assess your patients’ disease status.
Investor Extremes from Q3 to Q4 Results
Lantheus shares have been on a wild ride since October. After the company's Q3 earnings report in early November, here's what I wrote to my Healthcare Innovators members...
The Lantheus Protocol: Pylarify Growth May Slow
The outlook from management for Pylarify growth was not what analysts -- who are are modeling this product out 2-3 years -- were expecting. But most see the next two quarters as a temporary blip in a longer-term blockbuster trajectory.
One of the biggest issues was new competition that I, nor most analysts, didn't see coming. This quarter saw another PSMA (prostate cancer imaging) imaging agent hit the market in earnest: Telix's Illuccix recorded sales of $36.4M in the U.S, with 13% of market penetration.
The reaction was a plummet in LNTH shares from $70 to $55 in three days.
But a few analysts, including those from SVB Leerink and Truist. Here were the headlines I included in my November reports...
SVB Leerink: Pylarify Drives Another Beat & Raise Quarter; We See More Room for Growth
Truist Securities: 3Q Beat & Raise w/ EPS Ramp Still Underappreciated; Sell-Off Overdone In Our View; Buy The Weakness
Flash Forward to Q4 and a 20% Rally
Lantheus delivered a BIG and welcome beat-and-raise quarter and shares were up as much as +20%, poking their nose over $71.
Lantheus Holdings on Thursday reported Q4 adjusted net income of $1.37 per diluted share, up from $0.25 a year earlier. Analysts expected $0.96.
This quarterly report represents an earnings surprise of 42.71%. A quarter ago, it was expected that this diagnostic imaging company would post earnings of $0.83 per share when it actually produced earnings of $0.99, delivering a surprise of 19.28%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Lantheus Holdings, which belongs to the Zacks Medical - Products industry, posted revenues of $263.17 million for the quarter ended December 2022, surpassing the Zacks Consensus Estimate by 7.59%. This compares to year-ago revenues of $129.56 million. The company has topped consensus revenue estimates four times over the last four quarters.
For guidance, the company said it anticipates adjusted diluted EPS of $1.28 to $1.32 on revenue of $280 million to $285 million for Q1. Analyst consensus calls for adjusted EPS of $1.06 on revenue of $256.5 million.
Full 2023 adjusted diluted EPS is expected to range from $4.95 to $5.10, and revenue for the year is estimated to be $1.14 billion to $1.16 billion. Analysts were only projecting adjusted EPS of $4.22 on revenue of $1.04 billion.
Since Lantheus expects FY23 revenue in the range of $1.14B to $1.16B (consensus $1.04B) and the company anticipates FY23 adjusted EPS between $4.95 and $5.10 (consensus $4.22), analysts have obviously been scrambling to raise their estimates, thus moving LNTH into the Zacks #1 Rank tier.
Given this tremendous beat-and-raise, it's ridiculous the stock got trashed down below $50. But that's the game of Wall Street.
Among several bullish analyst reactions was this one...
Lantheus price target raised to $115 from $105 at Mizuho: Analyst Anthony Petrone raised the firm's price target on Lantheus to $115 from $105 and keeps a Buy rating on the shares. The strong Q4 print was supplemented by an "overly robust" initial 2023 outlook, and Petrone sees "substantial share upside as Pylarify accelerates and the portfolio matures."
Bottom line: Keep LNTH on your radar and always buy between $55 and $65.
Disclosure: I own LNTH shares for the Zacks Healthcare Innovators portfolio.
Bear of the Day:
NuVasive delivered adjusted earnings per share (EPS) of 43 cents in fourth-quarter 2022, up 7.5% year over year. However, the figure lagged the Zacks Consensus Estimate by 12.2%.
The one-time adjustments include expenses associated with certain business transition costs and European medical device regulations.
GAAP EPS of 42 cents compared favorably with the year-ago loss of 71 cents. In the full year, adjusted EPS were $1.98, up 17.9% from the year-ago period’s levels. However, the figure missed the Zacks Consensus Estimate by 2.9%.
Revenues in the fourth quarter totaled $305.4 million, up 1.11% year over year on a reported basis and 4.8% at a constant exchange rate or CER. The top line, however, missed the Zacks Consensus Estimate by 1.8%.
Fourth quarter total net sales were driven by further adoption of new products and solid procedural volumes in the United States.
Total revenues for 2022 were $1.20 billion, up 5.5% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 0.8%.
Geographical & Segmental Details
In the reported quarter, U.S. Spinal Hardware business revenues rose 4.6% year over year to $167.8 million on continued growth in the Simplify Cervical Disc and C360 portfolios.
Revenues from the U.S. Surgical Support business were $69.2 million in the fourth quarter, flat year over year. Growth was partially offset by a decline in Biologics.
International net sales for the third quarter were $68.4 million, representing a decline of 4.9% year over year (up 10.7% at CER).
EPS Downward Estimate Revisions
After this report, analysts took profit projections down from $2.15 to $1.92 for 2023. And next year saw a bigger cut from $2.54 to $2.30. Much of this was also entangled with the new merger deal.
On February 9, 2023, NuVasive and Globus Medical entered into a definitive agreement to combine the companies in an all-stock transaction. The transaction is expected to complete in the middle of 2023, subject to the approval of the companies’ shareholders, regulatory approval, and other customary closing conditions.
Here were some of the merger-related calls by analysts...
NuVasive downgraded to Equal Weight from Overweight at Wells Fargo: Analyst Vik Chopra downgraded NuVasive to Equal Weight from Overweight with a price target of $57.72, up from $47.00. On February 9, the company announced an agreement to combine with Globus Medical (GMED) in an all-stock transaction and the firm does not think that any of the larger spine players will be interested in bidding for NuVasive as most previous spine deals have been unsuccessful. Therefore they think the deal is unlikely to fall through.
Further, the firm believes the combination with NuVasive will be "challenging" to integrate and will distract management for the foreseeable future. Wells Fargo also points to "vastly different" cultures of the companies, and notes that prior spine deals have not created value.
Globus Medical downgraded to Underperform from Buy at BofA: Analyst Craig Bijou downgraded Globus Medical (GMED) to Underperform from Buy with a price target of $63, down from $83, after the company announced an agreement to acquire NuVasive in an all-stock transaction that values the latter at a $3.1B enterprise value at current prices.
The deal "came as a surprise to us despite prior rumors," BofA stated, adding that it sees real risk to sales estimates due to likely dis-synergies. Though the multiple that the price represents "seems reasonable given historical valuation," BofA struggles with Globus' decision to dilute both revenue growth and margins for scale when the company has been consistently taking share year after year and does not appear to have been limited by its scale in terms of its ability to strike deals with hospitals.
Bottom line: While NUVA is a central spine surgery tech company, this deal appears questionable to investors and analysts. Take your time and DD on deciding to participate.
Top 3 REITs to Buy as Inflation Still Runs Hot
January’s stock market gains reversed in February, and all three major bourses closed in the negative territory. The losses came as market participants feared that the Federal Reserve will continue to increase interest rates aggressively, thanks to the relentless rise in prices of indispensable goods and services in the beginning of 2023.
Inflation started showing signs of easing in the second half of 2022, but it came in hotter than expected in January. From fuel to gas to shelter, prices soared, lamentably, last month. The Labor Department added that the consumer price index (CPI) increased 0.5% in January, more than analysts’ expectations of an increase of 0.4%.
Similarly, the CPI notched an annual gain of 6.4%, also topping expectations. The core CPI advanced 0.4% last month and 5.6% year over year, more than analysts’ respective estimates of 0.3% and 5.5%.
The U.S. Bureau of Labor Statistics, meanwhile, added that the producer price index (PPI) rose 0.7% in January, exceeding analysts’ forecast of 0.2%. On a year-over-year basis, PPI increased by 6% compared to a forecast of 5.6%. Additionally, core PPI, which excludes the volatile energy and food prices, saw an increase of 5.4% year on year, topping the estimate of 5.1%.
The Fed’s favored inflation gauge also remained stubbornly higher in January. Last month, the personal consumption expenditure (PCE) index rose by 0.6%, higher than the 0.2% increase in December. Likewise, the PCE index increased by 5.4% year over year in January from December’s annual gain of 5.3%. The core PCI also increased and all the readings were more than estimated.
Now, with inflation remaining elevated and the Fed hell-bent on quelling inflationary pressure, things may not look encouraging for the broader stock market. However, some stocks stand to gain from a rise in inflation.
Real estate, for instance, is an obvious choice. After all, with a rise in inflation, property prices move northward. And with an increase in property prices, the amount charged by landlords as rent also increases, , resulting in higher rental income. Real estate, by the way, can be acquired through investments in a real estate investment trust (REIT).
Thus, amid such inflationary pressure, one should consider investing in the following three REITs that carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Broadstone Net Lease primarily buys and manages single-tenant commercial real estate properties.
BNL’s expected earnings growth rate for the current year is 5.7%. Its estimated earnings growth rate for next year is 2%. BNL’s shares have outperformed the Zacks REIT and Equity Trust – Residential industry so far this year (9.5% gains versus 5.5%).
NexPoint Residential Trust is engaged in acquiring, owning, operating, and selectively developing multifamily properties. It operates primarily in the Southeastern United States and Texas.
NXRT’s expected earnings growth rate for the next five-year period is 8%. Its shares have already gained 18.1% over the past five years. NXRT’s shares have outperformed the Zacks REIT and Equity Trust – Residential industry on a year-to-date basis (up 11.3% versus 5.5%).
Elme Communities is a multifamily real estate investment trust that owns and operates apartment homes principally in the Washington, DC metro and the Sunbelt.
ELME’s expected earnings growth rate for the current year is 12.5%. Its estimated earnings growth rate for next year is 2%. Shares of Elme Communities have gained 4.5% so far this year against the Zacks REIT and Equity Trust - Residential industry’s gain of 5.5%.
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NuVasive, Inc. (NUVA) : Free Stock Analysis Report
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Lantheus Holdings, Inc. (LNTH) : Free Stock Analysis Report
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Elme Communities (ELME) : Free Stock Analysis Report
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