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Canaccord Genuity on Best Buy, ConAgra, and Onyx Pharmaceuticals


Commentary on Best Buy's increased dividend, ConAgra's kosher crisis, and Onyx's drug approval.


The following are excerpts from Canaccord Genuity analyst's commentaries.

Best Buy (BBY): A Little More Pocket Change
Best Buy lifted its quarterly cash dividend by 6% to $0.17/share, consistent with the dividend increase in each of the prior three years. The move came ahead of its annual shareholder's meeting on Thursday where Best Buy was expected to provide details of its turnaround plan.

The higher dividend will be payable on October 2 to shareholders of record as of September 11.

Best Buy's increase in dividend is a sign of confidence as the company struggles to disconnect itself from a series of missteps earlier this year.

After months of uncertainty about its leadership, declining sales, and a falling stock price, investors are eager to hear who's really in charge and if the company has a more distinct vision to move forward.

Some analysts suspect that Richard Schulze will dump his shares, but according to some speculation, the former chairman and chief executive may potentially be exploring a bid to take the company private. However, given its high price tag, a private buyout appears to be unlikely.

ConAgra Foods (CAG): From the Throes of the Kosher Hot Dog Scandal
ConAgra Foods' adjusted quarterly profit narrowly beat Wall Street estimates as price increases and easing commodity cost inflation boosted performance in its consumer foods segment. The company, which released results from its fiscal fourth quarter on Thursday, also benefited from its recent acquisition of the National Pretzel Co., Del Monte Canada, Odom's Tennessee Pride, and the pita chip business of Kangaroo Brands.

The consumer foods segment saw its profit grow as the acquisitions and price increases more than offset the impact of commodity cost inflation and sales volume declines that resulted from those price increases. Commodity inflation in the quarter was 6%, ConAgra said, down from double-digit rates seen earlier in the fiscal year.

Excluding one-time items, ConAgra's earning from continuing operations for its fiscal fourth quarter ended May 21 were $0.51/share, topping analysts' average estimates by a penny. The company posted a net loss of $86.2 million, or $0.21/share, due to a change in the way it accounts for pensions. A year earlier, it reported a net profit of $250.1 million or $0.61/share. Net sales rose 6.3% to $3.41 billion, beating the Street's estimates of $2.28 billion.

Looking forward to fiscal 2013, ConAgra forecasts adjusted earnings per share ("EPS") growth of 6-8% and operating cash flow in excess of $1.2 billion.

Onyx Pharmaceuticals (ONXX): Side Effects Include...

Shares of Onyx Pharmaceuticals soared after winning support from a US advisory panel for its drug to tread a deadly blood cancer that affects 50,000 Americans. The panel of independent experts advising the US health regulator unanimously voted to recommend approval of Onyx's drug Kypriolis for bood cancer patients who did not respond to other medicines, including Takeda Pharmaceutical's Velcade and Celgene's (CELG) Revlimid or Thalomid.

Kypriolis shrunk tumors in 22% of multiple myeloma patients, which may not offer enough of an advantage in light of the the side effects, FDA staff said in a June 18 report.

The positive vote was surprising as FDA staff had raised questions about the drug's safety earlier in the week, citing serious heart, lung, and liver side effects, including five patients who died from heart ailments.

Multiple myeloma is a type of cancer that affects the plasma cells in bone marrow. About 20,000 patients are diagnosed in the US with myeloma each year, and 10,000 die from it, according to the American Cancer Society.

Ligand Pharmaceuticals (LGND), which has an agreement with Onyx to explore an IV version of the medicine, increased as well. A final FDA decision is expected by July 27.

Editor's note: For more information on Canaccord Genuity, click here.
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No positions in stocks mentioned.
Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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