Stock Commentary - New York week to July 14, 2008

NEW YORK: equities started the reporting period to July 14 on a strong note, having entered bear market territory, then slumped back the next day on financial crisis and economic outlook woes, as well as crude oil prices, and then proceeded up and down, with the Dow Jones ending 1.6% lower week-on-week. Pharmaceutical and biotechnology stocks were remarkably resilient, with just six of those tracked falling and 31 seeing a rise. The second-quarter financial results reporting season is just beginning, and even the two sets of figures from these sectors which have appeared (Johnson & Johnson and Genentech; see page 5) came too late to impact the reporting week.

Genzyme stock was up 5.7% on news of an upgrade by a Citigroup analyst to buy from hold, based on expected new products, improving margins and upside to earnings estimates. The analyst also raised his price target, which has been rebounding lately, to $91 from $80. The company had previously reduced its earnings guidance for the year, because of the delay in approval for its new Myozyme (alglucosidase alfa) plant. An upgrade by Charles Butler of Lehman Brothers to overweight from equal weight for Schering-Plough stock, along with an increase in his target price from $22 to $27 (an expected stock price gain of 26.3%) saw the drug major's shares move up 7.2%. The upgrade was based on expected recovering and improving sales of cholesterol drugs, and fewer patent expirations over the next five years than its peers. The company also said its full-year earnings would be in the range of $4.45 to $4.50, slightly ahead of forecasts. After senior management offered positive revenue guidance, Medarex stock headed north by some 17.2%. The company recently talked about its R&D antibody development program, strategy, and long-term value (see page 25). Also seeing a strong 20% gain was Ligand, on no particular news, except bouncing back from falls sustained after a delay in the US approval for its blood-clotting drug Promacta (eltrombopag). While Valeant shares had slipped back on the news of a Lazard Capital downgrade to sell from hold, the stock was buoyed by the disclosure of the chairman's purchase of 51,440 shares. The stock was up 4.7%.