AMGN probably still a short candidate IMO at at PE of 23.4 with this news:
Genentech Expects Flat Sales Growth
Evelyn M. Rusli, 03.23.07, 5:57 PM ET
Biotechnology giant Genentech saw its shares drop close to 3% on Friday after it said first-quarter U.S. sales growth will be flat sequentially.
Genentech (nyse: DNA - news - people ) shares fell 3.2%, $2.72, to $82.56 in Friday trading.
Wall Street consensus expected Genetech's overall first-quarter sales to rise 23%, or about half a billion dollars, to $2.76 billion, from $2.24 billion in the fourth quarter of 2006. U.S. sales comprised more than 90% of Genetech's overall sales in 2006.
In another blow, the company announced on Friday that researchers would no longer test its Avastin drug for a rare type of malignant lung cancer because of adverse side effects. Avastin, which is currently used to treat colon and common forms of lung cancer, is the company's second-best selling drug.
After a stellar year of sales in 2006, during which profits ballooned to $2.1 billion, a 65% increase from 2005, analysts wondered whether Genentech could maintain its growth rate. Sales of Lucentis, one of its blockbuster drugs, was expected to taper off in 2007 as patients transitioned to lower dosage treatments.
A company spokesman refused to comment on specific reasons behind the first-quarter slowdown but said the company will go into detail on April 11th when it releases its full results.
However, the long term outlook for Genentech appears strong, as the company continues to build its pipeline. Between, 2006 to 2010, the company expects to have at least 30 new products in its pipeline. This reflects a 50% revised increase in its earlier projection of 20 products.
"In the past 15 months we have nearly doubled the number of new molecular entities in our development pipeline and now have a total of 21," Arthur D. Levinson, chief executive officer, said on Friday.
Genentech's product portfolio also strengthened on Thursday, after rival Amgen (nasdaq: AMGN - news - people ) announced that it will abandon testing for Vectibix, a potential treatment for Colorectal Cancer, which posed a possible threat to Genentech's Avastine. Caris Research reiterated its "buy" on Genentech in a note on Friday, with a price target of $91.
