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Analysts assume third quarter earnings for the companies in the S&P 500 will be bad. But, looking at the number which is the average of all firms in the index is misleading. The market will be watching the numbers for and forecasts from nine companies. They are likley to drive the stock indexes up or down more than numbers from almost any other firms. They are, in essence, all that counts in determining how badly the recession is taking a toll on American business.
Posts for Ticker ‘DNA’
Earnings On Deck: Only Nine Companies Will Matter
OSI Phase III Falls Short (OSIP, DNA)
OSI Pharmaceuticals Inc. (NASDAQ: OSIP) is getting hit hard in early trading this morning. The biotech has released data showing that a Phase III trial of Genentech’s (NYSE: DNA) Avastin combined with Tarceva in certain patients with advanced non-small-cell lung cancer did not meet the primary endpoint of increasing overall survival compared with Tarceva plus placebo.
Top Pre-Market Analyst Upgrades (AMGN, CPLP, DRIV, DSX, DNA, GNK, MAKO)
These are some of the top upgrades we are seeing from Wall Street analysts this morning:
- Amgen (AMGN) Raised to Outperform at William Blair.
- Capital Product Partners (CPLP) Started as Outperform at Oppenheimer.
- Digital River (DRIV) Raised to Neutral at Goldman Sachs.
- Diana Shipping (DSX) Started as Outperform at Oppenheimer.
- Genentech (DNA) Raised to Outperform at William Blair.
- Genco Ship & Trading (GNK) Started as Outperform at Oppenheimer.
- Mako Surgical (MAKO) Started as Buy at Piper Jaffray.
Jon C. Ogg
October 2, 2008
Early-Bird Analyst Downgrades (CMVT, CTRP, GET, DNA, HAR, JNJ, PTRY, WDFC)
These are some of the early analyst calls we are seeing early this Friday morning:
- Comverse Technology (CMVT) Cut to Neutral at JPMorgan.
- Ctrip.com (CTRP) Cut estimates and maintained Buy but target cut 1/3 to $53 by Citigroup.
- Gaylord Entertainment (GET) Cut to Market Perform at Wachovia.
- Genentech (DNA) Cut to Hold at Citigroup.
- Harman (HAR) Cut to Neutral at Baird.
- J&J (JNJ) Cut to Neutral at UBS.
- Pantry (PTRY) Cut to Market Perform at FBR.
- WD-40 (WDFC) Cut to Underweight at JPMorgan.
Jon C. Ogg
August 15, 2008
Media Digest 8/24/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Greenspan says the housing market should bottom in 2009.
Reuters writes that US auto makers are scrambling to make more fuel-efficient cars.
Reuters reports that the SEC is close to a deal with major banks on auction-rate securities.
Reuters reports that the US short-selling rule for financial stocks had little impact.
Genentech & Roche Merger Coming Under More Fire (DNA)
Genentech Inc. (NYSE: DNA) is running into some issues over the merger with Roche at $89.00 per share. Wall Street DOES expect this merger to close with Genentech becoming a subsidiary again rather than a "majority owned" company by Roche. But it is expected that Genentech will have to fetch over $100.00 per share.
Today the firm is being sued by a law firm over this as being a breach of fiduciary duty and as an offer that is inadequate and that Genentech is worth more than $100.00 per share. We received a direct email copy of the complaint press release titled "COHEN MILSTEIN HAUSFELD & TOLL P.L.L.C. FILES LAWSUIT CONCERNING GENENTECH BUYOUT" which you can see below.
Another issue over this is that Roche has taken a corporate debt downgrade and may have more. S&P trimmed its corporate debt rating a notch and both Moody’s and Fitch have each notified that this may warrant downgrades after a review.
Jon C. Ogg
Below is a full copy of the release from the email we received:
Apple (AAPL): Steve Jobs Is Fine
Concern about the health of Apple (AAPL) CEO and founder Steve Jobs has been mounting since his appearance to launch the iPhone 3G model. He was terribly thin. Earlier this week, the press raised the issue again and when the company’s CFO said during the Apple earnings call that Jobs health was a "private matter," investors grew more restless.
Many Monday Pre-Market Downgrades (CEG, FIS, FISV, DNA, KBW, NKE, PSO, SHW, SWIR, SWK, WERN, WIT)
These are among the top analyst Downgrades or negative analyst calls affecting shares this Monday morning in pre-market trading:
- Constellation Energy (NYSE: CEG) Downgraded to Underperform at Jefferies.
- Fidelity National (NYSE: FIS) Cut to Perform at Oppenheimer.
- Fiserv (NASDAQ: FISV) Cut to Perform at Oppenheimer.
- Genentech (NYSE: DNA) Raised to Overweight at Lehman.
- KBW (NYSE: KBW) Cut to Market Perform at FBR.
- Nike (NYSE: NKE) Cut to Neutral at HSBC.
- Pearson plc (NYSE: PSO) Cut to Sell at Deutsche Bank.
- Satyam Computer Services (NYSE: SAY) Cut to Equal Weight at Morgan Stanley; Cut to Underperform at Credit Suisse.
- Sherwin Williams (NYSE: SHW) Cut to Sell at Goldman Sachs.
- Sierra Wireless (NASDAQ: SWIR) Target cut to $20 from $25 at CIBC.
- Stanley Works (NYSE: SWK) Cut to Hold at Deutsche Bank.
- Werner Enterprises (NASDAQ: WERN) Cut to Sell at UBS.
- WIPRO (NYSE: WIT) Cut to Underperform at Credit Suisse.
Jon C. Ogg
July 21, 2008
Roche Tries To Torpedo Genentech (DNA) Shareholders
Swiss drug company Roche is trying to steal the part of biotech company Genentech (DNA) that it does not already own. 
Roche has offered to buy the 45% of DNA that belongs to public shareholders for $89 a share. That is less than a 10% premium above where the company traded at the end of last week.
The total value of the buy-out would be $43.7 billion.
Media Digest 7/21/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Roche has offered to buy-out Genentech (DNA) for $42.7 billion.
Retuers reports that one of Yahoo!’s (YHOO) activist investors has called for a compromise which would put some of Carl Icahn’s nominees on the company’s board.
Genentech Masks a Whiff (DNA)
Genentech Inc. (NYSE: DNA) is initially looking like a severe disappointment to those who thought Cramer’s call last week was the right one. The largest biotech in the U.S. posted $0.82 EPS on $3.23 Billion in revenues. The company has also tightened its full-year 2008 non-GAAP earnings forecast to a range of $3.40 to $3.50 per share, revised from $3.35 to $3.45 per share.
First Call had estimates at $0.86 EPS on $3.23 Billion in revenues. For fiscal 2008, estimates are $3.43 EPS on $13.03 Billion in revenues.
The company did have disappointing drug sales as well:
Drug 2008 2007 Change
Rituxan® $651 $582 12%
Avastin®+ $650 $564 15%
Herceptin® $338 $329 3%
Lucentis® $216 $209 3%
Xolair® $129 $120 8%
Tarceva® $119 $102 17%
So far traders do not like this report, but the better news perhaps is that this slightly raised guidance is being treated well. Shares closed down 3% at $75.39. The initial reaction put shares down some 4% but they have recovered back to $75.40.
Jon C. Ogg
July 14, 2008
Genentech Ready to Lead Biotech Earnings Bias (DNA, BIIB)
Genentech Inc. (NYSE: DNA) is set to report earnings after the close of trading today. The largest biotech in the U.S. is expected to post $0.86 EPS on $3.23 Billion in revenues according to First Call. For next quarter estimates are $0.87 EPS on $3.32 Billion in revenues. For fiscal 2008, estimates are $3.43 EPS on $13.03 Billion in revenues.
So how does this rank in biotechs and drug companies? Genentech, based on a $76.13 (after a 2% drop today) has a forward P/E ratio for 2008 of 22.2. With a $79.9 Billion market cap, it trades at about 6.15 times revenues. With 2009 estimates at $3.90 EPS and $14.2 Billion in revenues, Genentech trades with forward multiples for 2009 of 19.5-times earnings and about 5.6-times revenues.
Just last week, Jim Cramer named Genentech as a safe spot to hide out in during a bear market or during a tough economy. The only problem is that we’ve heard him say that before and seen it tank thereafter. In fact, this stock seems to have a high-$60’s to low-$80’s trading range that has been in place over the last year and it has technically qualified as a "dead money stock" since the end of 2005.
Analysts have an average price target north of $86.00 and its 52-week trading range is $65.35 to $82.20. If you look at today’s options prices, it appears as though options traders are only expecting a move of about $2.00 in either direction after the earnings.
The issue that has been around Genentech for some time is that Wall Street analysts have either been making too bold of predictions and estimates for the company’s cancer drugs. Of course you could also set that to be interpreted as the company not being able to deliver. The focus on all of its major drugs rather than a big picture of the company’s growth has won every single quarter of late.
As a reminder, Roche owns the majority stake of Genentech so its $79.9 Billion market cap is quite misleading when you consider the real float of the stock. It also has a key drug partnership with Biogen-Idec (NASDAQ: BIIB) for its Rituxan.
Jon C. Ogg
July 14, 2008
Select Positive ASCO Data (ARRY, AZN, LLY, DNA, GSK, ONXX, PFE, ZGEN)
Last night was a novel release from the American Society of Clinical Oncology (or ASCO) as the society decided to publish all of the findings to the public at once. Keep in mind that many of the larger drug companies will have other presentations as well. Below is some of the key and very brief data:
Array BioPharma (NASDAQ: ARRY) and AstraZeneca have announced plans for two additional randomized Phase II trials for AZD6244 in the second half of 2008 to test AZD6244 (ARRY-886) in combination with a chemotherapeutic agent; one trial will be for melanoma patients and the other for non-small cell lung cancer patients. AstraZeneca (NYSE: AZN) showed positive breast cancer data in survivability.
Eli Lilly (NYSE: LLY) showed that its Alimta showed 3 months longer survival in a lung cancer sub-set group.
Genentech (NYSE: DNA) showed that Avastin in brain cancer trials showed 9 months survival while most patients live only 6 months from the study point.
GlaxoSmithKline (NYSE: GSK) showed that Tykerb added 1 year survival on advanced breast cancer patients.
Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) and Bayer HealthCare Pharmaceuticals announced that Nexavar tablets significantly improved overall survival by 47.3% in patients in the Asia-Pacific region with primary liver cancer versus those receiving placebo; Nexavar improved time to progression in these patients by 74%.
Pfizer (NYSE: PFE) presented data showing Celebrex may prevent lung cancer in current and former smokers.
ZymoGenetics, Inc. (NASDAQ: ZGEN) showed additional data from Phase 1 confirm that the combination is well-tolerated and shows anti-tumor activity; also reported positive results from the cohort expansion portion of a Phase 1 study with IL-21 and Rituxan in relapsed/refractory indolent lymphoma.
In the past investors had to wait for abstracts to be published and for presentations to be made. It also was a situation where embargoes were used with media on releasing certain data. Needless to say, there were many leaks on key data on who got what information when… and many profited from it.
This is only a brief summary of data from only a handful of the companies. You can count on there being more data from many more biotech and drug companies… Floods of it.
Jon C. Ogg
May 16, 2008
Jon Ogg produces and edits the "10 Stocks Under $10" newsletter and he does not own securities in the companies he covers.
Genentech & Biogen-Idec Tank Rituxan Hopes on Lupus Treatment (DNA, BIIB)
Genentech, Inc. (NYSE:DNA) and Biogen Idec, Inc. (Nasdaq:BIIB) came out this morning with some disappointing news.
The biotech giants have announced that a Phase II/III study of Rituxan for lupus has failed to meet its primary endpoint defined as the proportion of Rituxan treated patients who achieved a major clinical response or partial clinical response.
Unfortunately, this study results also failed to meet any of the six secondary endpoints. Genentech and Biogen Idec said they will continue to analyze the study results and will submit the data for presentation at an upcoming medical meeting.
Based on the reaction, they can analyze all they want and it doesn’t look like it will matter. Right before the open, Genentech shares are down almost 5% to $69.70 and Biogen-Idec shares are down almost 5% at $61.50.
Jon C. Ogg
April 29, 2008
Biotech Business Daily (AMLN, CERS, LLY, DNA, GTOP, IMCL)
Amylin Pharmaceuticals (NASDAQ: AMLN) reported first quarter losses of $68.8 million, or $0.51 EPS, wider than the $49.4 million in the first quarter of 2007. Losses are credited to a drop in sales in diabetes treatment, Byetta, a drug they co-market with Eli Lilly (NYSE: LLY), and increased expenses. Analysts estimated losses of $0.47 EPS. Shares are down over 8% to $28.83 on a 52-week range of $23.75 to $53.25.
Cerus Corporation (NASDAQ: CERS) up on news that the company can expand label claims on platelets and plasma treated with the INTERCEPT Blood System. The System prevents transfusion-associated disease, TA-GVHD. The label expansion allows use of the System over gamma irradiation in European blood banks for TA-GVHD prevention, decreasing costs to blood banks and increasing safety. Shares of Cerus are up almost 5% to $6.75. The 52-week range is $4.18 to $10.29.
Eli Lilly (NYSE: LLY) doubled profits, tagging a first quarter profit of $1.1 billion on a 14% sales increase. However, although doubling, they failed to meet Street estimates. Sales of depression drug Cymbalta rose 37% while sales of Zyprexa were flat and Byetta rose less than expected. The company raised its full-year guidance. Shares are down $2.26 to $49.81 on a 52-week range of $46.60 to $61.00.
Genentech (NYSE: DNA) released updated data on Avastin for the treatment of lung cancer. Results showed increased progression-free survival but not overall lung cancer survival rates. The already approved treatment in conjunction with chemotherapy is fighting for market share in the highly competitive market for this treatment. Shares are down $0.72 to $72 on a 52-week range of $65.35 to $82.90.
Genitope Corp (NASDAQ: GTOP) plummeting as GE Capital Corp. demanded payment on $3.8 million in loans last Friday. The company’s list of troubles is endless—failing Phase III testing, laying off 165 of 200 employees, salary cuts…and the latest failure to repay debts. Shares are down 16% today to $0.15, a new low. The 52-week range is $0.16 to $4.93.
ImClone (NASDAQ: IMCL) up on news that lung cancer competitor Genentech released disappointing late stage data on Avastin. ImClone’s similar drug, Erbitux, is currently in clinical trials. Shares are up $1.68 to $47.83, near 52 week highs. The 52-week range is $30.34 to $47.94.
Rachel Lopez
April 21, 2008
Genentech Expands Stock Buybacks (DNA)
Genentech, Inc. (NYSE:DNA) has announced that the biotech giant has authorized the extension of its current stock repurchase program through June 30, 2009 and it amended the current repurchase program.
It is increasing the maximum number of shares that can be repurchased to a total of 150 million shares from an amount of 100 million shares, which in effect is increasing the total value of shares that can be repurchased to $10 Billion from $8 Billion. These share repurchases can be in the open market or in privately negotiated transactions from time to time at management’s discretion. It also may used derivative securities to effect repurchases.
The repurchased stock is meant to offset dilution caused by the issuance of shares in connection with Genentech’s employee stock plans, which is generally less impressive than when companies go out and retire shares or stick them in the treasury for future acquisitions.
You can join our open email distribution list to hear about key calls, buybacks, IPO’s, special financings, restructurings and more.
Jon C. Ogg
April 15, 2008
Jon Ogg produces the Special Situation Investing Newsletter. He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.
Media Digest 4/11/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Bernanke says that the current financial system can be fixed.
Reuters writes that Google (GOOG) is using Frank Quattrone as its investment bank advisor.
Reuters reports that banks involved in the Clear Channel (CCU) buy-out argued that the case against them should be dismissed.
Reuters reports that Delta (DAL) and its pilot’s union have reached an agreement that will let a merger with Northwest (NWA) move forward.
The Wall Street Journal writes that most observers believe that a Microsoft (MSFT) deal to buy Yahoo! (YHOO) is the most likely outcome of the struggle between the two companies.
The Wall Street Journal writes that Fontier Airlines (FRNT) has filed for Chapter 11.
The Wall Street Journal reports that a poll of economists shows they believe the economy will ger worse.
The Wall Street Journal writes that Verizon (VZ) is in a legal dispute with Time Warner Cable (TWC) about connection speeds of the two company’s broadbands offerings
The Wall Street Journal reports that Lehman (LEH) repackaged some of its unsold buyout loans into a new security that it used as collateral to obtain cash loans from the Fed.
The Wall Street Journal writes that profits at Genentech (DNA) rose on solid revenue gains.
The New York Times writes that George Soros has given a dire forecast for the economy.
The New York Times reports that March retail sales for most big chains were weak.
The FT writes that AMR (AMR) has cancelled another 1,500 flights.
The FT reports that Wal-Mart (WMT) had strong March sales and lifted its outlook.
The FT writes that a number of airlines want compensation for delays in Boeing’s (BA) 787.
Bloomberg writes that GE’s (GE) push for revenue overseas may help the company weather the US downturn.
Douglas A. McIntyre
Genentech Shares Hang In Despite Soft Key Drug Sales (DNA)
Shares of Genentech Inc. (NYSE: DNA) are trading slightly lower after reporting a gain in earnings. The biotech giant posted $0.74 net EPS, but non-GAAP EPS excluding special items was $0.84 EPS on revenues of $3.06 Billion. First Call showed estimates at $0.82 EPS on $3.11 Billion in revenues, which is a beat on earnings but slightly light on revenues.
CNBC gave some individual figures for expectations on its individual drugs, and again these were light of many estimates on each target out there:
- Avastin sales were $600 million in the quarter, compared with an expected $629 million;
- Rituxan sales reached $605 million, under estimates of $607 million;
- Herceptin salers were $339 million, under estimates of $343 million;
- Lucentis sales reached $198 million, under forecasts of $202 million.
Shares closed up 0.3% at $78.00 in regular trading today, and shares are actually up marginally by 0.4% in after-hours. That is better than the initial drop of 1% in after-hours trading after the news was out.
Jon C. Ogg
April 10, 2008
Genentech to Set Biotech Tone For Earnings Season (DNA, OSIP, SGEN, ABT, BIIB)
Thursday after the close, we’ll get to see earnings out of Genentech (NASDAQ: DNA). The estimates from First Call are $0.82 EPS on $3.11 billion in revenues. Next quarter estimates are $0.86 EPS on $3.24 billion in revenues. Estimates for fiscal Dec-2008 are $3.43 EPS on $13.06 billion in revenues.
Genentech is tied to many other drug and biotech companies because of partnerships, so as the number one biotech stock it has implications in many companies based upon the breakdown of its trends and its individual drug comments. Below are some of its partners:
- OSI Pharmaceuticals (NASDAQ: OSIP) for Tarceva,
- Seattle Genetics (NASDAQ: SGEN),
- Abbott Laboratories (NYSE: ABT),
- Roche for Avastin 9and ownership),
- and Biogen-Idec (NASDAQ: BIIB) for Rituxan.
Analysts have an average price target north of $85.00. Shares were down almost 1% at $79.00 late today before the market closed. That price target used to be significantly higher before this on peaked out around $90.00 and fell to under $70.00 in Dec-2007 and Jan-2008. Genentech’s 52-week trading range is $65.35 to $83.41.
Genentech’s annual meeting of stockholders will also be held on April 15, 2008, so there is another round of much of the same presentation data to see next week. While the woes of one biotech may be mothers milk for another biotech company, Genentech can create at least somewhat of bias for traders going into an earnings season. As traders are constantly looking for stocks and sectors with less and less economic sensitivity, that may be more true than in many years and quarters of the past.
Jon C. Ogg
April 7, 2008
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