Stock Commentary - New York week to April 23, 2007

NEW YORK: equities put in another week of strong performance in the reporting period to April 23, with the Dow Jones notching up a further 1.6%, and closing just shy of the next psychologically-important level of 13,000. Bullish first-quarter earnings reports were helping investor sentiment but, in the pharmaceutical and biotechnology sectors, stock movements were mixed, with 22 of those tracked up and 17 down.

Biotech shares got a boost on the last reported day, when the announced purchase of MedImmune by AstraZeneca caused investors to speculate on the next takeover (see pages 2 and 3), with analysts noting that cash-rich traditional drug companies continue to see the biotechnology sector as a means to boost growth through merger and acquisition. Biogen Idec, with similar assets as MedImmune, is attracting attention; its main products are Rituxan (Rituximab) and Tysabri (natalizumab). Biogen, up 7.5% on the week, also got a boost from a study that reported Avonex is more cost-effective than similar treatments. After Schering-Plough blew away its estimates and also raised its guidance for the fiscal year (see page 5), analysts at Lehman Brothers reiterated their equal weight rating on the stock and raised their target price from $26 to $32. Tim Anderson of Prudential Financial held his neutral rating on the stock, but raised his estimates from $27 to $29. He told clients that S-P is seeing better-than-anticipated prescription trends, and is expected to realize higher-than-expected equity income from its cholesterol joint venture in the first quarter. The firm also reported that further on in the year it will begin late-stage trials on a drug to prevent blood clots; it could see annual sales in the billions, it was noted. Other analysts also look favorably on the stock. The stock was up 10%. Gilead's first quarter figures (see page 6) were not a fluke, according to most analysts, who feel that it should be able to maintain its momentum through the end of this year and beyond. HIV drug sales, including Atripla (efavirenz, emtricitabine, tenofovir) and Viread (tenofovir), are strong and the firm's pipeline looks good, with ambrisentan likely to be approved soon and launched in the third quarter. The stock rose 4.4% on the week