Amgen’s current dividend is 2.3%, which is rather high for a biotech stock. It also should be noted that the $64.00 price is above the stock’s old former rangebound levels of $50.00 to $60.00. Pfizer currently yields 3.7%, but that is about to rise to closer to 4%, and Merck yields about 4.50% after its dividend hike.

The question for 2012 is simple: Which biotech stocks will be among the second waves to initiate paying a dividend? By our count, these are the biotech outfits that might entertain following Amgen’s dividend path: Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), PDL BioPharma, Inc. (NASDAQ: PDLI), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN), and Vertex Pharmaceuticals Inc. (NASDAQ: VRTX).

We would have evaluated the chances of Gilead Sciences Inc. (NASDAQ: GILD) initiating a dividend, but this $11 billion proposed buyout of Pharmasset, Inc. (NASDAQ: VRUS) is likely to keep Gilead tied up for quite some time.

Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) is close to all-time highs above $70 and is now worth a whopping $13.2 billion. Estimates are $1.30 EPS for 2011 and $1.66 EPS for 2012, making this one have a much higher valuation while it is still rapidly growing. Some investors may expect that it could start paying out a dividend, but it is too soon by our take today, even with a $445 million balance of cash and liquidity with almost no long-term debt.

Biogen Idec Inc. (NASDAQ: BIIB) has estimates of $5.89 EPS in 2011 and $6.31 EPS in 2012. The company had only about $3 billion in cash and investments at the end of September versus a current market cap of about $27 billion. 2011 was the year that investors decided to give up on worrying about the very rare PML cases in TYSABRI, and that allowed Biogen shares to rise almost 60% in 2011. If Biogen decides to get off the no-dividend bandwagon soon, we would only look for an initial payout of $1.00 on an annualized basis for a while.

Celgene Corporation (NASDAQ: CELG) may still be too new of an earnings story to start expecting a dividend. The earnings estimates are $3.80 EPS in 2011 and $4.51 EPS in 2012. With almost $2.6 billion in cash and investments, its market cap is larger than Biogen’s at $30 billion.

Cubist Pharmaceuticals Inc. (NASDAQ: CBST) managed an incredible breakout year as its drugs treat hospital-borne infections, with nearly a 100% share price gain in 2011. The market cap is now about $2.45 billion, and it had nearly $1 billion in cash and liquidity before a recent $221 million acquisition versus about $450 million in long-term debt. Cubist probably could start to pay a dividend if it wants to, but the company has decided to be an acquirer rather than hoarding cash or going defensive. Chances are that it may need to hold on to its cash while it absorbs Adolor and anything else it is considering.

PDL BioPharma, Inc. (NASDAQ: PDLI) has been a dividend payer from its patent royalties, but some payments have been one-time payments until its most recent $0.15 payout for each of the past four quarters. The company also recently forecast a 5% revenue drop and investors are already braced for lower royalty payments. The company recently lost its CFO after only about three years on the job and we really do not like to see CFOs leave biohealth companies. Estimates are $1.18 EPS for 2011 and $1.38 EPS in 2012, but it has about $225 million in cash and liquidity versus a market cap of $867 million. The company may just stick with its current payout structure’s high yield as is until (or if) it can secure another large patent license.

Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) is worth some $5.1 billion or so in market capitalization and is fresh off the news that it settled with Genentech over U.S. opthalmic sales of the eye drug EYLEA with a patent case still brewing, but with Regeneron agreeing to pay out $60 million if sales reach $400 million and it will pay royalties out as well. With cash and liquidity of near $500 million at then end of September we think it is a bit premature to ask this one to start shelling out its cash to shareholders yet, considering it is still expected to have a wide loss in 2012.

Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is so far off of highs now that it seems unlikely investors are expecting much on the dividend front. The company is back on the path of growth after some changes and stumbles, and now its market cap is almost $7 billion. With this one it just feels too soon to expect any dividends in reality. We could analyze all we want, but its new revenue growth is challenged by a cash balance of just over $800 million versus $400 million in long-term debt. What is interesting is that Vertex’s $0.30 EPS expected for 2011 is expected to be $4.55 EPS in 2012. It had a loss of $3.77 EPS in 2010. Maybe after another year or so we can evaluate its future dividend strategy.

After reviewing the great biotech sector’s larger components, it sure does not sound like many other than Biogen Idec Inc. (NASDAQ: BIIB) are really new prime-time dividend candidates for 2012, other than the high payout of PDL BioPharma, Inc. (NASDAQ: PDLI).

JON C. OGG

ARM Holdings plc (NASDAQ: ARMH) Raised to Buy at Citigroup.
CareFusion Corporation (NYSE: CFN) Raised to Buy at BofA/ML.
ConocoPhillips (NYSE: COP) Cut to Underperform at Macquarie.
Edison International (NYSE: EIX) Added to US Focus List at Credit Suisse.
General Mills, Inc. (NYSE: GIS) Added to Conviction Buy List at Goldman Sachs.
Goldman Sachs Group Inc. (NYSE: GS) estimates cut to expect a loss by Citigroup.
PDL BioPharma, Inc. (NASDAQ: PDLI) Cut to Sector Perform at RBC.
SAP AG (NYSE: SAP) Started as Buy at Citigroup.
Smithfield Foods Inc. (NYSE: SFD) Raised to Buy at BofA/ML.
Sprint Nextel Corporation (NYSE: S) Cut to Hold at Argus; Removed from U.S. Focus List at Credit Suisse.
Stryker Corporation (NYSE: SYK) Raised to Buy at BofA/ML.
Telefonica, S.A. (NYSE: TEF) Cut to Neutral at Goldman Sachs.
Telecom Italia SpA (NYSE: TI) Cut to Sell at Goldman Sachs.
Tyson Foods Inc. (NYSE: TSN) Raised to Buy at BofA/ML.
Valero Energy Corporation (NYSE: VLO) Raised to Overweight at Barclays.

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NetApp, Inc. (NASDAQ: NTAP) is taking a big breather after its earnings report.  Shares closed at $58.54 and are down 7% at $54.44 on right at 1 million shares since the closing bell.

Itron, Inc. (NASDAQ: ITRI) is down taking a breather after reporting $0.95 non-GAAP EPS along with a $1.6 billion total backlog of orders… Shares are down over 4.7% at $60.58 on over 35,000 shares.

NVIDIA Corporation (NASDAQ: NVDA) beat earnings and guided higher… Shares are up over 2% on more than 1.2 million shares at $23.89 on last look.

PDL BioPharma, Inc. (NASDAQ: PDLI) may be due to spreads or something trade related after it slid during the day by 7.5%… After a $5.03 close we saw trades up at $5.16 and $5.44… again maybe just the after-hours shenanigans.

Seahawk Drilling, Inc. (NASDAQ: HAWK) is still SeaChicken now that it is bankrupt, but shares are up marginally from the close of $4.22 at $4.30 on over 900,000 shares since the close.

Williams Companies Inc. (NYSE: WMB) is soaring after announcing that it will split into two stand-alone publicly traded companies and was hiking the dividend by 60%… Shares are up 10.6% at $30.74 at a new 52-week high on more than 4 million shares in the after-hours.

Have a great evening, catch you in the morning!

JON C. OGG

F5 Networks, Inc. (NASDAQ: FFIV) had a very rough week and shares were  battered after its revenue shortfall and mixed guidance was just nowhere near good  enough to satisfy investors after what had been close to a 200% return in the last year.  Many firms threw in the towel as shares went from almost $140 to under $110 and the stock closed out the week at $109.97 versus a 52-week range of $47.11 to $145.76.  We saw two standout calls actually getting behind the network optimization solutions provider.  F5 was raised to “Outperform” from “Neutral and the price target was raised to $134.00 from $103.00 by Credit Suisse.  The firm called it a buying opportunity and a chance to accumulate shares.  Gleacher & Co. also stepped in and upgraded the rating on F5 to “Buy” from “Hold” with a $130.00 price target due to its market position and due to still well above-market growth even if that growth is decelerating.

MannKind Corporation (NASDAQ: MNKD) was one that felt like no Kind man this week.  The company’s inhalable diabetes treatment called Afrezza was given yet another blow by the FDA. In a complete response letter, the FDA asked for two more tests, which will likely cost more capital than MannKind has available today.  Shares were as high as $9.50 before the pre-halt and before the news hit and shares actually hit $10.00 on Tuesday.  After the halt was released, MannKind opened down close to $5.00 on Thursday and shares closed the week out at $5.76 after having briefly challenged $6.00 on Thursday and Friday.  We knew downgrades would come, and we gave our own detailed outlook over at BioHealthInvestor.com.  Still, there was a standout gutsy call made elsewhere this week from a brokerage and research firm we rarely here about.  A firm called Weeden & Co. upgraded the shares from Hold to Buy and raised the price target from $6.00 to $9.00.  Apparently the only thing at issue was that the firm did not have a sell rating before, although most traders and investors treat a “hold” rating the same as a “sell” rating.  Dangerous times for a dangerous stock, but one gutsy call.

Allis-Chalmers Energy, Inc. (NYSE: ALY) is soaring on news that Seawell is offering to buy the company for $890 million or $4.25 per share in cash, a 85% premium to yesterday’s $2.30 close.  Shares are up 61% at $3.71 on almost 500,000 shares.

Autodesk Inc. (NASDAQ: ADSK) is trading higher after $0.36 EPS vs. $0.27 expected; Revenue grew by 14% to $472.8 million vs. $459 million expected.  Shares are trading up 3.5% at $28.41 on over 50,000 shares.

Eli Lilly & Co. (NYSE: LLY) is trading down after a patent case ruling against Lilly for Strattera, and that patent was out to 2017.  Lilly also announced job cuts and lower 2010 guidance.  Shares are down 4.2% at $35.05 on over 30,000 shares.

Nordstrom, Inc. (NYSE: JWN) posted 39% income gains but its outlook was unchanged.  Shares are trading down 5% at $31.76 on thin volume.

NVIDIA Corporation (NASDAQ: NVDA) missed earnings estimates as many feared but the stock had already traded off so much that investors are buying the stock this morning.  Shares are up 4.25% at $9.34 against a 52-week trading range of $8.65 to $18.96.

PDL BioPharma, Inc. (NASDAQ: PDLI) is getting hit after it received a letter from Genentech relating to European patents.  Shares are now down 10% at $5.57 on more than 125,000 shares.

Premier Exhibitions Inc. (NASDAQ: PRXI) is soaring in reaction to its press release saying that the United States District Court for the Eastern District of Virginia, Norfolk Division, has issued an opinion granting a salvage award to RMS Titanic Inc.  The Company has been awarded 100% of the fair market value of the artifacts, which the Court set at approximately one hundred ten million dollars.  Shares are trading up 98% at $2.30 on about 9,000 shares in the pre-market.  Average volume is roughly 72,000 shares, the 52-week range was $0.68 to $1.65, and the pre-news market cap was listed as $54.3 million.

Spreadtrum Communications Inc. (NASDAQ: SPRD) is trading higher after the Chinese maker of baseband chips for wireless devices significantly beat earnings expectations and raised guidance b a similar amount for the quarter ahead.  Shares are up 8.7% at $10.72, but volume is thin.  The 52-week range is $2.67 to $11.15 and the average volume is about 850,000 shares.

Telestone Technologies Corp. (NASDAQ: TSTC) is getting whacked this morning after earnings on thin trading volume.  Shares were down 18% last night and the drop right now is 16% at $11.42.  Its 52-week range is $4.24 to $24.94 and average volume is 324,000 shares.

Trubion Pharmaceuticals, Inc. (NASDAQ: TRBN) is soaring after signing a definitive merger agreement with Emergent BioSolutions Inc. (NYSE: EBS); holders will receive an upfront payment of $1.365 per share in cash and 0.1641 shares of Emergent BioSolutions common stock, representing $4.55 per share before dilution.  Trubion shares are up 49% at $4.49, but trading volume is very thin as it is a micro-cap stock with low volume.  The 52-week range is $2.29 to $6.75.

Unica Corporation (NASDAQ: UNCA) is the daily double after IBM agreed to pay $21.00 per share in cash versus a $9.55 close.  Shares are up 117.8% at $20.80 on nearly 1 million shares.  This is an all-time high for Unica.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

There are generally some reasons that have gotten these to cheap screening levels, but some of these are showing significant value for a sector that usually commands a high-premium to most sectors.  Amgen has recovered substantially from its woes, and Biogen has as well.  Genzyme’s troubles allowed it to make the screen with some key caveats, and the valuation screens elsewhere showed that Cephalon, Cubist, and PDL are worth a look.  All of these companies were also well above our screening threshold of $400 million in market cap and average volume of 250,000 shares or more.  These all came in above $1 billion in market cap and most never see under 1 million shares per day in average volume.

The full story is available at BioHealthInvestor.com.

-The 24/7 Wall Street Team

• Altera (NASDAQ: ALTR) Raised to Outperform at Wachovia.
• Amazon.com (NASDAQ: AMZN) Raised to Overweight at JPMorgan.
• BCE (NYSE: BCE) Cut to Sector Perform at Scotia.
• Biogen Idec (NASDAQ: BIIB) Cut to Neutral at JPMorgan.
• Leap Wireless (NASDAQ: LEAP) Raised to Outperform at Wachovia.
• PDL BioPharma (NASDAQ: PDLI) Raised to Neutral at JPMorgan
• Town Sports International (NASDAQ: CLUB) Cut to Neutral at Piper Jaffray.
• Varian Medical Systems (NYSE: VAR) Cut to Perform at Oppenheimer.
• Yamana (NYSE: AUY) Cut to Buy at TD.

Jon C. Ogg
January 5, 2009

Here are some brief explanations on each stock:

• ArthroCare Corporation (NASDAQ: ARTC) was down over 50% and that prior$11.90 low may be a figure for the history books now.  It expandedrestatements of financial statements and withdrew previous adjustments;and it disclosed subpoenas for production of documents.  Just whatevery investor wants to hear.
• Corel Corp. (NASDAQ: CORL) broke under its old $3.01 lows, down about70% from highs.  Too bad that old merger deal never worked.
• GeoEye, Inc. (NASDAQ: GEOY) fell another 5%.  Satellite imagerycontracts may still be lucrative, but supporting the business is not acheap endeavor.
• Hiland Holdings GP, LP (NASDAQ: HPGP) and Hiland Partners, LP (NASDAQ:HLND) both blew through prior lows.  Wachovia cut it, seems not allMLP’s are created equally.
• Hill-Rom Holdings, Inc. (NYSE: HRC) put in a new 52-week low.  So muchfor medical products being recession-proof, so much for that break-upbeing a great one.
• PDL BioPharma Inc. (NASDAQ: PDLI) is spinning off its biotech unit andshares were down over 10% today as the company is being booted out ofthe S&P Mid-Cap 400 Index.  This one’s nickname is "Pidly" as theticker acronym.  Looks like the nickname may be the surname.
• Smith & Nephew (NYSE: SNN)… so much for the knee and hipreplacements trends.  Oh well, other medical products have been bitingthe dust on this list of lows as well.
• Take-Two Interactive (NASDAQ: TTWO) fell again.  That warning the otherday was just brutal.  Signing the Rockstar team is only worth somestability it seems.  Unfortunately, because of the magnitude of thedrop and because of actual GAAP LOSSES this only looks cheap becauseits stock is off so much.

Jon C. Ogg
December 19, 2008

• AudioCodes (AUDC) cut to neutral at Merrill Lynch.
• Becton Dickinson (BDX) cut to neutral at Credit Suisse.
• H.B. Fuller (FUL) cut to neutral at JPMorgan.
• Lehman Brothers (LEH) cut to neutral at Goldman Sachs; cut to Hold at Citigroup.
• Medarex (MEDX) cut to neutral at JPMorgan.
• NVIDIA (NVDA) cut to equal weight at Lehman.
• PDL BioPharma (PDLI) cut to underweight at JPMorgan.

Jon C. Ogg
September 11, 2008

• Aflac (NYSE: AFL) Started as Buy at SunTrust Robinson Humphrey.
• Allied Waste (NYSE: AW) Raised To Buy From Neutral at Goldman Sachs.
• Campbell Soup (NYSE: CPB) Raised To Overweight from Equalweight at Lehman.
• MeadWestvaco (NYSE: MWV) Raised to Buy from Hold at Citigroup.
• NYSE Euronext (NYSE: NYX) Started as Neutral at Credit Suisse.
• Old Dominion Freight Line (NASDAQ: ODFL) Raised to Outperform from Neutral at Baird.
• PDL Biopharma (NASDAQ: PDLI) Cut to Neutral from Outperform at Credit Suisse.
• Petro-Canada (NYSE: PCZ) raised to Buy at Banc of America.
• Siliconware Precision (NASDAQ: SPIL) Raised to Neutral from Sell at UBS.
• WD-40 (NASDAQ: WDFC) Cut to Underweight from Neutral at JPMorgan.

Jon C. Ogg
June 13, 2008