Stock Commentary - New York week to Apr 30, 2007

New York: equities showed a positive trend in the week to April 30, with the Dow Jones rising 0.3% on the opening day, and up 1.2% over the five days to April 28. The highlight of week was Thursday when the Dow Jones reached a record high, breaking through the psychologically important 13,000 mark, boosted by a strong round of new financial results reports, while the weak dollar helped lift shares in companies with heavy foreign exposure.

ArQule's cancer therapies have pushed the stock higher for the past few months and news of a deal with Kyowa Hakko Kogyo on ARQ 197, its most promising product, is positive as it leaves the company with proprietary rights to the drug so it can develop other markets, but despite this the firm ended the week down 7.1%. There was positive spin at the April meeting of the American Association for Cancer Research, but even better news will come out of the American Society of Clinical Oncology meeting in early June. Analysts at Fortis Bank have reiterated their buy rating on ArQule and raised their target price from $10 to $16. After Affymetrix announced disappointing quarterly earnings, which it blamed on restructuring charges, and forecast full-year revenue below Wall Street views, its shares fell 15.7%, though several analysts did not drop their ratings on the stock. Analysts at Deutsche Bank Securities reiterated their hold rating, but reduced their price from $26 to $24. Analysts at Robert W Baird kept an outperform rating on the stock, but also dropped their estimates and target price from $35 to $34. Charles Butler of Lehman Brothers also pointed to competition from Illumina and noted that investors are waiting for the mid-year launch of Affymetrix' Array genotyping system. He has an equal-weight or neutral rating, with a $25 target. After the company boosted its first-quarter and full-year profit outlook well above analyst expectations, Cephalon stock rose 5.4%, ahead of releasing the actual figures. Bret Holley of CIBC World Markets feels the company's new guidance is conservative and has hiked his price target to $93 from $89 and reiterated his sector outperform rating. The shares are markedly undervalued relative to peers, he said, adding that they should substantially outperform this year.