Author Archives: Scalper1

Zillow Has Nothing To Fear From Facebook; Acquisitions Planned?

Zillow Group ( ZG ) does not face a serious threat from Facebook ( FB ), and the online real estate market leader might be getting ready to make acquisitions in 2016, said Cowen and Co. “Competitively, management is not seeing much impact from Facebook and there was no mention of pressure from ( News Corp. ( NWS )-owned rival) Realtor.com,” wrote Cowen analyst Thomas Champion in a research report Thursday, following a meeting this week with the head of Zillow’s investor relations unit, RJ Jones. “At this point, management seems focused on capitalizing on the audience growth established with the Trulia merger.” Champion said merger and acquisition opportunities “remain on the table” as Zillow “is actively on the lookout for unique assets.” The digital real estate company is likely interested in “regional tuck-ins,” including New York-based apartment search website Naked Apartments or “niche technology products” such as DotLoop, a collaboration platform for real estate professionals that Zillow bought last year . Zillow’s return on ad spend per agent is rising, said Champion, with the online real estate company posting $3.2 billion in commissions generated from $470 million in agent revenue for 2015. “This is up from $2.3 billion in commissions and $350 million in spend as of 2014,” he said. With the reclassification of some of its display ad revenue, Zillow’s full-year display revenue guidance of $54 million to $56 million, down from $96 million in 2015, “is not as severe as previously thought,” said Champion. Zillow is counting on continuing growth in areas including rentals, mortgages, DotLoop, and StreetEasy — the residential real-estate website for shoppers in the New York region — to drive growth, he said. Zillow stock jumped last week after the No. 1 online real estate listings company got a price-target boost and rating upgrade from RBC Capital Markets, which cited strong online traffic trends. RBC upgraded Zillow to outperform from sector perform, and hiked its price target on Zillow stock to 34 from 21. Zillow stock was up 4% in afternoon trading in the stock market today , near 24. Zillow now holds an IBD Composite Rating of just 47 out of a possible 99. Seattle-based Zillow completed its $2.5 billion purchase of top competitor Trulia in February 2015. The union put the two most-visited real estate websites under the same ownership and formed the Zillow Group in a move designed to expand reach, forge efficiencies and cut costs. Both the Zillow and Trulia websites remain in operation, targeting homebuyers and renters, as well as real estate agents who pay to advertise alongside the home listings on the sites. Move Inc. is the parent of rival online real estate site Realtor.com, which is an official website of the National Association of Realtors. Media empire News Corp. bought Move in 2014.

How Much Could Medivation Sell For? Wall Street Speculates

Shares of drugmaker Medivation ( MDVN ) soared more than 20% Thursday to a nearly three-month high on rumors that the company is fending off suitors, leading Wall Street to speculate on how much the company might go for. Late Wednesday, Bloomberg — citing anonymous sources — reported that Medivation hired bankers to defend against takeover interest. Reuters, also citing anonymous sources, said that Medivation had been working with JPMorgan ( JPM ). Medivation stock was up 23% in afternoon trading on the stock market today , near 46. Bloomberg mentioned Sanofi ( SNY ) as a possible buyer. Credit Suisse analyst Vamil Divan wrote in a research note that Sanofi made sense as a buyer, since Medivation’s prostate-cancer treatment Xtandi and its pipeline of other cancer treatments would fit Sanofi’s existing cancer franchise. “We model Medivation worth $55 (per share) to Sanofi ($65 with Sanofi’s 23% tax rate),” Divan wrote. “We see Sanofi’s Taxotere sales force potentially increasing Medivation sales 2% and assume a 20% reduction in Medivation’s R&D and 40% reduction in Medivation’s SG&A (sales, general & administrative expenses). We note a 12% tax-rate benefit over Medivation (23% vs 35%).” Divan added that the greatest synergies would actually come with  AstraZeneca ( AZN ), given its market-leading sales force for its prostate-cancer drug Casodex. He estimated that Medivation would be worth $59 a share to AstraZeneca, or $75 with its 16% tax rate.  Roche ( RHHBY ), which has a cancer franchise but not in prostate, would do well to pay $54 to $60 a share. Jefferies analyst Biren Amin made a similar calculation and came up with a $51-a-share price for Sanofi, and the same for a hypothetical buyout by Bayer ( BAYRY ). He also considered big biotech Amgen ( AMGN ) as a possible buyer, calculating a $54-a-share value to that company. However, Amin also wrote that if the companies adopt a “rose-colored glasses” view of Medivation’s potential, with U.S. Xtandi sales peaking at $5.5 billion, it could be worth $71 a share to Sanofi and Bayer, and $75 to Amgen. Shares of Amgen and Bayer were up a fraction Thursday afternoon, while Sanofi stock was down 1%.