Numerous Catalysts Point to Outperformance in Biotechnology Stocks in 2002 -- Analyst's top picks include MEDI, CVTX and ALT -
from feb. 2002 but still worth looking at:
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Numerous Catalysts Point to Outperformance in Biotechnology Stocks in 2002 -- Analyst's top picks include MEDI, CVTX and ALT -
14 Feb 2002, 11:23am ET
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/FROM PR NEWSWIRE MINNEAPOLIS 612-331-7800/ [STK] USB [IN] FIN BIO [SU] RTG TO BUSINESS EDITOR:
Numerous Catalysts Point to Outperformance in Biotechnology Stocks in 2002
-- Analyst's top picks include MEDI, CVTX and ALT --
NEW YORK, Feb. 14 /PRNewswire-FirstCall/ -- U.S. Bancorp Piper Jaffray Senior Biopharmaceuticals Analyst Mark Augustine projects strong performance for biotechnology stocks in 2002. In his report, Investing in Biotechnology in 2002, Augustine outlines four positive factors for his bullish outlook on the biotechnology sector in 2002: 1) strong industry fundamentals; 2) reasonable valuations; 3) increased merger and acquisition (M&A) activity; and 4) a supportive economic outlook.
Strong Industry Fundamentals
Augustine expects numerous biotechnology sector stock catalysts in 2002, including pivotal data from at least 30 Phase III studies, a number of high-profile product approvals, more than 200 products in late-stage clinical studies, three or more companies joining the ranks of the profitable and the appointment of a new FDA Commissioner. Potential product approvals in 2002 include: Aldurazyme from Genzyme General Division (NASDAQ:GENZ--$46.25, #) and BioMarin Pharmaceutical Inc., (NASDAQ:BMRN--$11.94, #@), FluMist from MedImmune, Inc., (NASDAQ:MEDI--$41.37, #), Picovir from ViroPharma Incorporated (NASDAQ:VPHM--$19.10, #@) and Aventis S.A. (NYSE:AVE--$72.49), Fabrazyme from Genzyme, Replagal from Transkaryotic Therapies, Inc., (NASDAQ:TKTX, $37.73) and Amevive from Biogen, Inc. (NASDAQ:BGEN-- $54.45, #).
Reasonable Valuations
Although Augustine does not expect a return to the frothy industry valuations seen in 1999 and early 2000, he finds today's biotechnology stock valuations to be reasonable and not out of line with broader indices or other technology stock sectors. "Add in our positive outlook for industry-specific dynamics, and we believe one has a recipe for a winning 2002 in biotechnology stocks," said Augustine.
Increased M&A Activity
Augustine believes that big pharmaceutical companies could soon join the M&A movement recently seen in the biotechnology sector. Augustine states that the pharmaceutical industry is plagued by patent expirations, increased reliance on a small number of key products and a size issue, in which an ever-increasing number of successful products are required to sustain double-digit annual earnings growth.
"The psychological effects of tepid or declining pharmaceutical stock prices could serve as an impetus to do deals and buy [biotechnology] products and technologies-sooner, rather than later," said Augustine. "With investor expectations already low, we believe investors could actually applaud pharmaceutical company deals that would be dilutive near-term if they offer potential remedies for an uncertain long-term outlook."
Positive Economic Outlook
Augustine views the broad economic and market outlook as net positive for biotechnology stocks in 2002. "Dot.com fervor underscored the rabid (oft-indiscriminate) investor appetite for stocks with high-growth potential," said Augustine. "In our view, the appetite remains; the dot.com competition is gone, and biotechnology stocks should benefit."
Top Stock Picks For 2002
Among small-capitalization biotechnology issues, Augustine recommends Alteon, Inc. (AMEX:ALT--$4.38, #@). He believes that Alteon could offer the best stock performance in the biotechnology industry in 2002. "This stock story remains relatively undiscovered," said Augustine. "We believe that ALT-711, Alteon's lead drug candidate, has sales potential of up to $1 billion to treat isolated systolic hypertension (ISH), an unmet medical need affecting more than 15 million people in the United States."
In addition, Augustine likes late-stage CV Therapeutics, Inc., (NASDAQ:CVTX--$44.94, #@). "We believe that CV Therapeutics could be a major stock winner in 2002," said Augustine. "In our opinion, CV could assume the type of 'halo status' investors have accorded to Gilead Sciences, Inc., (NASDAQ:GILD--$67.30), a well-managed infectious disease company. If our forecasts hit the mark, CV's annual revenues could exceed those of Gilead Sciences within five years." As of February 11, 2002, equity market capitalizations for GILD and CVTX were $6.5 billion and $1 billion, respectively.
Finally, Augustine believes that MedImmune's acquisition of Aviron is a smart strategic fit. "We believe that MEDI investors should take heart in the planned Aviron acquisition," said Augustine. "The key to the deal's success is the fate of Aviron's FluMist (intranasal influenza vaccine), which we show boosting MEDI's long-term earnings-per-share growth prospects from 21 to 27 percent."
Augustine's report, Investing in Biotechnology in 2002 is available for download at gotoanalysts.com
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The following disclosures apply to stocks mentioned in this report if and as indicated: (#) U.S. Bancorp Piper Jaffray (USBPJ) makes a market in the company's securities. (^) USBPJ analysts who follow this company, or members of their household, have a beneficial interest in the company's securities. USBPJ analysts or members of their household may sell such positions while a Strong Buy, Outperform, or Market Perform rating is maintained; however, they may do so only upon appropriate USBPJ management approval. (>) USBPJ analysts who follow this company, or members of their household, have a beneficial interest in the company's securities that were acquired in a private transaction pre-IPO. USBPJ analysts or members of their household may sell such positions while a Strong Buy, Outperform, or Market Perform rating is maintained; however, they may do so only upon appropriate USBPJ management approval. (@) Within the past three years, USBPJ was managing underwriter of an offering of, or dealer manager of a tender offer for, the company's securities or the securities of an affiliate. (~) A USBPJ officer, director, or other employee is a director and/or officer of the company.
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-0- 02/14/2002
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