Stock Commentary - New York week to April 20, 2009

NEW YORK: equities fell on the first trading day of the reporting period to April 20, on negative economic data, but then rebounded, with the Dow  Jones again above the psychologically-important 8,000 level, though  plunging on the last day and losing this, dragged lower by a  particularly bad day in the banking sector. The Dow was down 2.7% week  on week. Drug and biotechnology stocks were mixed, with 17 of those  tracked rising and 19 falling, as the first-quarter results season  sprang into life.

There was a great deal of volatility in Affymetrix, which leapt 13.8% on  no particular news, and ArQule, which reversed its previous week's rise  with a 10.7% fall. King Pharmaceuticals moved up 4.1% after the stock  was upgraded by UBS from sell to buy and given a $10.50 price target.  UBS is looking for the settlement of patent litigation on Skelaxin  (metaxolone). A few weeks ago, Goldman Sachs put the stock on its  recommended list, noting the likely settlement, as well as the  likelihood that Embeda (morphine sulfate/naltrexone) will soon gain FDA  approval and the possible underestimation by Wall Street of the market  for Acurox (oxycodone HCl/niacin). The financial publication Barron's  feels that Cephalon's shares are undervalued, noting that the firm's  pipeline is robust and that it should post double-digit earnings growth  this year. The firm's pipeline and small market capitalization make it a  possible takeover target, the journal noted.  Cephalon stock was off  2.2% for the week. Though it is looking about a year ahead, Wachovia has  upgraded Johnson & Johnson to outperform, with a target price of $60 to  $62. While this year's figures will be held back by patent expirations  and currency, growth will accelerate next year, the firm told clients,  because of approvals and launches. Next year will see what it called  "pivotal data" for two billion-dollar-plus opportunities: Xarelto  (rivaroxaban) for stroke prevention in atrial fibrillation patients and  telaprevir for hepatitis C. J&J was up 2.6% for the week, despite  posting lower sales and profits for the first quarter, but maintaining  full-year forecasts (Marketletter April 20). Conversely, fellow US drug  major reporting last week, Abbott Laboratories, dipped 0.7% after  posting a 53% jump in first-quarter profits.