Merrill Lynch analyst Stuart Weisbrod on Monday repeated his"buy" ratings on five biotech stocks, advising investors to takeadvantage of current low prices in anticipation of a second-quarter rally by the quality names in the group.
For the intermediate term, Weisbrod recommended Alza Corp.(AMEX:AZA), Genzyme Corp. (NASDAQ:GENZ), Biogen Inc.(NASDAQ:BGEN) and Immunex Corp. (NASDAQ:IMNX). Longerterm, he recommended Chiron Corp. (NASDAQ:CHIR).
Alza, which is down 15 percent this quarter, lost $1.13 to $42on Monday. Genzyme was off 25 cents to $42.88, down 27percent for the quarter. Biogen, which rose 25 cents to $26.75,is down 33 percent. Immunex lost 50 cents to $44, off 26percent. Chiron rose $1 to $46, but is off 34 percent.
Weisbrod projected a 100 percent increase in Alza's 1992earnings, as he expects it to double royalties from clientcompanies. Alza royalties on sales of Procardia XL by Pfizer,estimated at $900 million this year, should rise to 7 percent ofsales in 1992 from 4 percent to 5 percent in 1991, he said.Estimated sales of the Nicoderm transdermal nicotine patch byMarion Merrell Dow are a minimum of $125 million.
Genzyme is selling at 23 to 24 times Weisbrod's 1993 earningsestimate of $2.05, and he projects a five-year compoundedgrowth rate of 40 percent to 50 percent.
Over the next 18 months, Weisbrod said he expects Biogen tocomplete Phase III trials of beta interferon for multiplesclerosis and file a product license application. He also expectsthe company to complete Phase III trials of Hirulog as atreatment for unstable angina, begin clinicals of two endothelialcell adhesion blockers, and initiate clinicals of a new anti-CD4monoclonal antibody to treat AIDS.
The analyst said Immunex has three products in development,each with potential to generate more than $200 million inannual sales by the mid-1990s: PIXY321 and the solubleinterleukin-1 and tumor necrosis factor receptors. As a result,Immunex could earn more than $4 per share by 1995, he said.
After breaking even this year, Weisbrod said Chiron shouldreturn to profitability in 1993, earning $1.50 to $2 per share,followed by annual earnings growth of 35 percent to 40percent through the decade. He said the company could becomeone of the strongest and broadest in the sector. -- KarenBernstein
BIOTECH INDEX SINKS ON MONDAY
The AMEX Biotechnology Index fell 1.57 points to 179.09 onMonday, the first time the index has fallen below 180.
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