Where Next For Rising US Drugmakers' Share Prices?

27 January 1997

Drug industry analysts in the USA are taking the rising prices ofpharmaceutical company shares as "par for the course," given a broad stock market advance. The market seems to be going through a rotation, said Hemant Shah of HKS & Co, who noted that "one day it's oil stocks and the next it's drug stocks."

Steve Scala of Cowen & Co, who was quoted in Business Week as saying that the supercharged environment for the drug sector is not going to continue, noted that, at present, the whole group is "flying without any specific reason."

Still, the drug group's recent performance has been partly attributable to the continued expansion in the overall US stock market, moderate underlying growth in the general economy and rising drug stock earnings forecasts, according Kenneth Kulju of UBS Securities. He feels that the US economic outlook will support another solid year of relative performance for the sector.

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