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Biotech / Medical : Pharma News Only (pfe,mrk,wla, sgp, ahp, bmy, lly)
PFE 25.47+0.7%Jan 9 3:59 PM EST
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To: Anthony Wong who wrote (1185)12/4/1998 4:21:00 PM
From: Anthony Wong  Read Replies (1) of 1722
 
Chiron gains on analyst upgrade, Buyout by Novartis may be on horizon for 2001

By Tiare Rath, CBS MarketWatch
Last Update: 4:11 PM ET Dec 4, 1998
News Index
Biotech Stocks

EMERYVILLE, Calif. (CBS.MW) -- Biotechnology company Chiron's
shares advanced Friday afternoon following an analyst's upgrade.

Deutsche Bank Securities analyst Alex To bumped
up his recommendation on Chiron (CHIR) shares
to "buy" from "accumulate." The analyst said the
California company looks stronger over the next
year to two years based on cost-containment
programs and the possibility of a buyout by
Novartis (NVTSY) in 2001.

In the short term, To said earnings could be as
much as 30 cents a share higher because of
Chiron's attempts to cut costs in its operations. In
addition, sales from Regranex, which treats diabetic
foot ulcers, will likely improve next year, he said.

The analyst has a 12-month price target of $35 a
share on the stock. Friday, Chiron's shares rose
15/16 to 23 7/8.

In the long term, To said, investors should keep an
eye on Chiron's relationship with Novartis, the Switzerland-based drug
maker.

Novartis currently holds a 49.9 percent stake in Chiron but has the option
of bumping up that stake to 55 percent in January 2000. In January 2001,
Novartis will be allowed to buy the rest of Chiron.

"We think the possibility of a take-out by Novartis will serve to make
[Chiron's] stock interesting throughout next year," To said.

Tiare Rath is a reporter for CBS MarketWatch.
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