FWIW,
>>We believe it's time for investors to dip their feet in the biotech pool," was the title of Raymond James analyst Brian Rye's research note Friday as he urged clients to take advantage of what he called an "indiscriminate" sector-wide sell-off this quarter.
But the timing of this sell-off, following a relatively good performance in the second quarter, was not unusual, according to Rye, who said it's not atypical for biotechnology stocks to perform sluggishly during July and August before excelling in the September to December period.
So, he said, this has historically been an opportune time to buy into the group and he sees an opportunity to buy stock in companies with solid balance sheets that are expecting positive clinical news in the coming months and years.
Rally's big gainers remain busy, but steady
Cisco's news ignites a bull stampede
Kollar-Kotelly to preside over Microsoft case
Cisco leaps as optimism drives stock
Market news and more! Sign up to receive FREE email newsletters
Get the latest news
24 hours a day from our 100-person news team.
"Given the traditional late summer sluggishness in biotechnology stocks and the impact of recent weakness in the broader markets, we believe the likelihood of targeted consolidation and alliances with larger biotech and pharmaceuticals concerns has increased within the biotechnology sector," said Rye, referring to this week's news of Pharmacopeia's planned acquisition of privately held Eos Biotechnology; the anti-cancer drug licensing agreement between Isis Pharmaceutical and Eli Lilly; and the FDA's approval of a therapy for attention deficit/hyperactivity disorder that was jointly developed by Celgene and Novartis.
"Given the recent conservatism of the FDA, the announcement of drug approvals such as this cannot help but be viewed positively by those in the investment community," Rye said. "Thus, we believe the momentum is building for another end-of-the-year rally."
Also expected to serve as a catalyst for the group, Rye said, is the upcoming appointment of a new leader for the Food and Drug Administration, which he sees occurring by year-end.
Rye identified Abgenix (ABGX: news, chart, profile), Guilford Pharmaceuticals (GLFD: news, chart, profile), ILEX Oncology (ILXO: news, chart, profile), ImmunoGen (IMGN: news, chart, profile), Onyx Pharmaceuticals (ONXX: news, chart, profile) and Medarex (MEDX: news, chart, profile) as most likely to benefit from that outlook for the sector.
All carry "strong buy" recommendations from Rye with the exception of ImmunoGen and Onyx, which he rates "buy."
The Amex Biotech Index ($BTK: news, chart, profile) rose 3.5 percent on the day Friday while Abgenix gained $1.74, or 6.3 percent, to close at $29.41; Guilford added on 46 cents, or 3.8 percent, to $12.53; ILEX was lifted $1.42, or 5.1 percent, to $29.15; Medarex moved up $1.57, or 8.3 percent, to $20.39; and Onyx tacked on 2 cents to $7.08, while ImmunoGen dropped 14 cents, or 1 percent, to $14.43.<<
snip
Like his picks, but I've soured on GLFD. Wonder what he's seeing there.
Cheers, Tuck |
