Sector Snap: Biotechnology stocks

Even with shares trading at all-time highs, analyst expects new gains for biotech stocks

Associated Press

NEW YORK (AP) -- Shares of major biotechnology stocks are trading around all-time highs, but a Credit Suisse analyst said Thursday that the sector still has room to rise and should do better than the broader market in 2013.

Analyst Ravi Mehrotra raised his price target on some of the largest companies in the sector. He said that biotech stocks have done better than the broader market since the start of 2011, which could raise worries about a bubble in the sector. However Mehrotra said that's not the case. In his view the shares are strong because of successful products, and he said clinical trial results and product launches will boost large-cap biotech stocks and the broader sector in 2013.

The product launches include Medivation Inc.'s prostate cancer pill Xtandi and Biogen Idec Inc.'s multiple sclerosis pill Tecfidera, along with clinical trial data on Gilead Sciences Inc.'s latest hepatitis C regimen.

The analyst raised his target price on shares of Amgen Inc., the world's largest biotechnology company, to $115 per share from $100, increased his target for Biogen Idec shares to $225 from $200, his target for Gilead Sciences Inc. shares to $60 from $55 and his target on Celgene Corp. to $125 from $110. Mehrotra rates Biogen and Gilead shares "Outperform" and has a "Neutral" rating on Amgen and Celgene stock.

All four stocks have reached all-time highs in the last week.

Amgen's products include the anemia drugs Aranesp and Epogen; Neulasta and Neupogen, which are used to fight infection in cancer patients; and the immune disorder treatment Enbrel. Amgen shares are up about 86 percent since the start of 2011 and reached a high of $106.79 in Wednesday trading. On Thursday afternoon the stock was up 40 cents to $105.21.

Biogen received marketing approval for Tecfidera on March 27. Tecfidera is a twice-a-day pill that used to control multiple sclerosis. Biogen also makes injectable MS treatments Tysabri and Avonex. The company's stock hit an all-time high of $199.54 Tuesday and has nearly tripled since the start of 2011. Biogen Idec shares lost 9 cents to $195.65 in afternoon trading.

Gilead makes a number of HIV drugs such as Stribild, Atripla, and Truvada. Two years ago the company acquired hepatitis C drug developer Pharmasset for $11.1 billion, gaining drugs like sofosbuvir in the process. Its shares have doubled in value over the last year and set an all-time high of $49.49 on March 28. The shares were up 2 cents to $47.65 in afternoon trading.

Celgene makes cancer drugs including Revlimid, Thalomid and Abraxane. Its shares have climbed more than 90 percent since the beginning of 2011. On Thursday the stock rose 24 cents to $115.79.

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