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Omar Venerio
Omar Venerio
Articles (1681) 

2 Stocks With High Potential on Thursday

Shares of JetBlue Airways and Teva Pharmaceuticals jump strong on earnings

May 07, 2020 | About:

Shares of JetBlue Airways Corp. (NASDAQ:JBLU) gained more than 2% on Thursday after the company posted first-quarter results. Revenue declined 15% from the prior-year quarter to $1.59 billion, falling $40 million short of expectations. The company posted a loss of 42 cents per share, beating estimates by 1 cent.

“We entered this crisis with the second strongest balance sheet among U.S. airlines," CEO Robin Hayes said. "In the past two months, we have moved quickly to both protect and strengthen our liquidity position. Since the beginning of March, we have made decisive changes to our growth plan to minimize cash burn, including deep capacity cuts to our schedules. We have now reduced our CAPEX plan by $1.3 billion between now and the end of 2022, and by the end of May, we anticipate we will have lowered our operating expenses by approximately 50% year over year.”

Revenue decreased 15% year over year due to a 52% decline in March related to the impact of the Covid-19 virus.

Further, operating expenses rose 7.1% year over year, but excluding special items, adjusted operating expenses declined 3.6% year over year.

Liquidity is strong, with cash, cash equivalents and short-term investments at $1.8 billion, up from $1.3 billion at the end of 2019.

During the quarter ended Dec. 31, Richard Snow (Trades, Portfolio) reduced his holding by 65% to 748,944 shares, while Joel Greenblatt (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) opened new positions of 436,409 and 66,981 shares.

Shares of Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) jumped almost 10% on Thursday after reporting first-quarter revenue of $4.36 billion and earnings of 76 cents per share. It beat analysts' earnings estimates by 17cents and revenue expectations by $210 million.

"Our very strong results during the first quarter of 2020 were impacted by greater demand in our major markets for generic and OTC products and respiratory products," President and CEO Kåre Schultz said. "Stronger revenues across these categories, along with growth in our operating and net profit, contributed to strong free cash flow and a further reduction in our net debt to $24.3 billion."

For the quarter, the GAAP gross profit was $2,063 million, an increase of 11% compared to a year ago. The GAAP gross profit margin of 47.3% was up from 44.7% in the prior-year quarter. The non-GAAP gross profit was $2,312 million, up 8%. The non-GAAP gross profit margin was 53.1%, up from 51.8%. The increase in gross profit was attributed to higher profitability in each of the three continents as well as higher sales from Austedo and a favorable mix of generic products in North America, Europe and international markets.

The GAAP research and development expenses were $221 million, down 15% compared to the first quarter of 2019. The GAAP selling and marketing expenses were also down to $613 million, a decrease of 5% compared to the first quarter of 2019 due to cost reductions and lower marketing and travel costs.

On the other hand, the GAAP general and administrative expenses were $304 million, which grew 4%.

Moreover, Ebitda was $1,375 million, an increase of 19% from the year-ago quarter.

Looking at cash generation, free cash flow of $551 million was higher than $360 million in the first quarter of 2019 due to the increase of cash flow generated from operating activities.

During the first quarter of 2020, the Vanguard Health Care Fund (Trades, Portfolio) sold the stock. In the fourth quarter of 2019, Michael Price (Trades, Portfolio) did the same.

Disclosure: The author holds no position in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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