I'm in full agreement with McCamant.
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Biotech Sector Holding Up Very Well
Posted Wednesday, July 07, 1999 at 09:59 AM EST
by Jim McCamant
Medical Technology Stock Letter
The biotech stocks have been holding up very well in the weak market that we have been experiencing. The price action of many of the second-tier biotech stocks has improved significantly. Considering how well these stocks have performed in this nervous market, we anticipate that many of our recommended stocks will move up on any market strength. As we stated on March 11, 1999 in Issue #366, "The biotech industry is beginning a period of consolidation," and sure enough, the merger and acquisition activity is clearly helping the group.
The acquisition by Roche of the portion of Genentech it did not already own will free up about $3.5 billion to buy other biotech stocks. Abbott's bid for Alza, worth approximately $7.3 billion at the time the merger was announced, and Pharmacia & Upjohn's $650 million bid for Sugen will also create more buying activity in the sector. Not only is this activity going to spur buying in biotech, but the prices being paid for these companies represent just how undervalued many biotechs stocks have become. It is clear that despite the shaky market we have been experiencing, that now is a time to be very aggressive in establishing or adding to positions of your favorite biotech stocks.
Source: Medical Technology Stock Letter, P.O. Box 40460, Berkeley, CA
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