Why Genentech Is the Biotech of Choice (from Businessweek)
For investors who want a strong presence in the complex biotech universe, behemoth Genentech (DNA) is the stock of choice. So say some pros who predict biotechs will be next in line to rally. "Genentech is due for a big bounce on its technicals and fundamentals," says Carl Birkelbach of Birkelbach Investment Securities. Soaring to nearly 90 in early 2007, the stock then slumped, hitting 67 on May 27, 2008.
But at the May 30 American Society of Clinical Oncology meeting in Chicago, Genentech presented favorable new data on its products. And the stock rose, to 72.47 by June 4. Genentech, Birkelbach figures, will shoot to 100 in 24 months. He is impressed with Genentech's pipeline, with 15 compounds set to come out in two years and 30 within five. Genentech plans to seek approval for a new application for its chief drug, Avastin, for an aggressive brain cancer known as GBM. Avastin is now approved for first-time treatment of metastatic colorectal and breast cancers.
May-Kin Ho of Goldman Sachs (GS), who rates Genentech (a client) a buy, says Avastin's potential in other types of cancer--including ovarian, prostate, and brain, with a combined sales potential of more than $1.2 billion--"is underappreciated." Ho sees earnings of $3.17 a share in 2008, $3.82 in 2009, and $4.57 in 2009, up from $2.70 in 2007.
For investors who want a strong presence in the complex biotech universe, behemoth Genentech (DNA) is the stock of choice. So say some pros who predict biotechs will be next in line to rally. "Genentech is due for a big bounce on its technicals and fundamentals," says Carl Birkelbach of Birkelbach Investment Securities. Soaring to nearly 90 in early 2007, the stock then slumped, hitting 67 on May 27, 2008.
But at the May 30 American Society of Clinical Oncology meeting in Chicago, Genentech presented favorable new data on its products. And the stock rose, to 72.47 by June 4. Genentech, Birkelbach figures, will shoot to 100 in 24 months. He is impressed with Genentech's pipeline, with 15 compounds set to come out in two years and 30 within five. Genentech plans to seek approval for a new application for its chief drug, Avastin, for an aggressive brain cancer known as GBM. Avastin is now approved for first-time treatment of metastatic colorectal and breast cancers.
May-Kin Ho of Goldman Sachs (GS), who rates Genentech (a client) a buy, says Avastin's potential in other types of cancer--including ovarian, prostate, and brain, with a combined sales potential of more than $1.2 billion--"is underappreciated." Ho sees earnings of $3.17 a share in 2008, $3.82 in 2009, and $4.57 in 2009, up from $2.70 in 2007.
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