Stock Commentary - New York week to Mar 19

NEW YORK: equities had a roller-coaster time in the reporting period to March 19, with the Dow Jones falling nearly 2% on the first day, erasing the previous week's strength on woes relating to mortgages, then rising for two days and then moving up and down, to close the week down 0.8%. Pharmaceutical and biotechnology stocks also had a rough time, with 26 of those tracked falling and only 13 seeing a rise.

Affymetrix shares turned upward, leaping 11.4%, after the company won a series of patent infringement claims for arrays, scanners, software and other products used for genetic-variation analysis and was awarded $16.7 million. Quintin Lai of Robert W Baird upgraded the stock to outperform from neutral, based on valuation. He also told clients that, based on a forward royalty rate of 15%, Affymetrix stands to benefit from Illumina's current high-growth potential. Leerink Swann also upgraded the stock in the same fashion. Some analysts have noted that the ruling, which Illumina plans to appeal, will affect the market for genotyping and genetic sequencing. Alpharma, down 8.2%, is offering $200.0 million in new notes to fund future business development and for general corporate purposes, including working capital. Just a few months ago, the company ended a $308.0 million stock buyback and discontinued its quarterly dividend to support what it called growth initiatives. Wall Street watchers note that real interest lies only in the drug division, where 15%-20% growth is expected, and not in the animal health and active pharmaceutical ingredients divisions, though they do deliver consistent earnings growth of 6%-8%. Investors are cautioned to watch the drug pipeline and competitors, they note. Some analysts feel that Vertex shares have finally bottomed out. Though the stock was off 9% for the week, some analysts have begun raising their ratings. David Witzke of Banc of America increased his rating to neutral from sell after shares fell below his price target of $29. He had downgraded the stock in December after seeing data for telaprevir. Data that Vertex plans to present at the European Association for the Study of the Liver meeting will tend toward patients who responded quickly to the therapy.