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

Amgen Inc. (NASDAQ: AMGN) Cut to Market Perform at BMO.
AutoNation Inc. (NYSE: AN) Raised to Neutral at Goldman Sachs.
Boston Properties Inc. (NYSE: BXP) Maintained Buy but cut target to $105 from $120 at Argus.
Cree Inc. (NASDAQ: CREE) Maintained Buy with $33 target at Canaccord Genuity.
Dole Food Co. Inc. (NYSE: DOLE) Cut to Underperform with $9 target at BofA/ML.
Garmin, Ltd. (NASDAQ: GRMN) reiterated Outperform as Bull of the Day at Zacks.
Gilead Sciences Inc. (NASDAQ: GILD) Raised to Outperform at BMO; Raised to Buy at Citigroup (late-Monday).
Hartford Financial Services Group (NYSE: HIG) Cut to Underperform as Bear of the Day at Zacks.
Harman International Industries Inc. (NYSE: HAR) named as Value stock of the day at Zacks.
Microsoft Corporation (NASDAQ: MSFT) Started as Hold at ThinkEquity.
Netflix, Inc. (NASDAQ: NFLX) Re-initiated as Sell with $60 target at Canaccord Genuity.
Pharmasset, Inc. (NASDAQ: VRUS) downgraded by Wells Fargo, UBS, Canaccord Genuity, Leerink Swann, and Citigroup after super-premium buyout.
Tyson Foods, Inc. (NYSE: TSN) Reiterated Buy at BofA/ML.
Wynn Resorts Ltd. (NASDAQ: WYNN) Cut to Neutral at Janney Capital.
YUM! Brands, Inc. (NYSE: YUM) added to U.S. Focus List at Credit Suisse.

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JON C. OGG

The unofficial closing bells put the DJIA down about 248 points to 11,547.23 (-2.11%), the NASDAQ fell more than 49 points (-1.92%) to 2,523.14, and the S&P 500 fell -1.86% or more than 22 points to 1,192.99.

There were several analyst upgrades and downgrades today, including Apple Inc. (NASDAQ: AAPL) reiterated as ‘buy’ with a $500 price target at Credit Suisse. Other ratings actions included DeVry, Inc. (NYSE: DV) cut to ‘underperform’ and ‘Bear of the Day’ at Zack’s; Morgan Stanley (NYSE: MS) raised to ‘buy’ at Argus; Qualcomm Inc. (NASDAQ: QCOM) reiterated as ‘buy’ with a $72 price target at Argus; Target Corp. (NYSE: TGT) cut to ‘neutral’ at JPMorgan; and Western Digital Corp. (NYSE: WDC) raised to ‘overweight’ at Barclays.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Hastings Entertainment Inc. (NASDAQ: HAST) was down more than -13%, at $1.65, after posting a new 52-week low of $1.55; Tech Data Corp. (NASDAQ: TECD) was down -0.9%, at $47.47, and Tyson Foods Inc. (NYSE: TSN) was up about 0.3% at $19.51. We took a closer look at Tech Data’s earnings earlier today.

After markets close today and before they re-open for tomorrow, there will be an avalanche of earnings reports. Perhaps the most closely watched will be Hewlett-Packard Co. (NYSE: HPQ) and a half dozen Chinese solar PV makers: JinkoSolar Holding Solar Co. Ltd. (NYSE: JKS), Trina Solar Ltd. (NYSE: TSL), Canadian Solar Inc. (NASDAQ: CSIQ), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), LDK Solar Co. Ltd. (NYSE: LDK), and Suntech Power Holdings Co. Ltd. (NYSE: STP). Shares in all these solar makers are down today, as investors anticipate the bad news that’s coming.

Several other standouts from today are as follows…

LinkedIn Corp. (NASDAQ: LNKD) is down more than -4%, at $68.95. The company’s 180-day lock-up period ended today, adding another 24 million shares of the company available for sale. LinkedIn tied up another 56 million shares for an additional 90 days or the damage could have been worse.

Pharmasset, Inc. (NASDAQ: VRUS) is up nearly 85%, at $134.03, after hitting a new 52-week high of $135. The company has agreed to be acquired by Gilead Sciences Inc. (NASDAQ: GILD) for $11 billion.

Gilead Sciences, Inc. (NASDAQ: GILD) is down nearly -9.7%, at $36.02, after posting a new 52-week low of $34.45. Investors tend to believe that Gilead is paying too much for Pharmasset.

Focus Media Holding Ltd. (NASDAQ: FMCN) is down nearly -39%, at $15.56. The Chinese advertising company is the target of a report by short-selling firm Muddy Waters alleging that Focus Media has signififcantly overstated the number of screens in its LCD network.

Global Education and Technology Group Ltd. (NASDAQ: GEDU) is up more than 97%, at $10.60, after posting a new 52-week high of $10.70. The company is being acquired by Pearson plc, owner of the Financial Times newspaper and other media properties.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is up more than 10%, at $55.02. The company received USDA approval for its eye drug Eylea.

Zillow, Inc. (NYSE: Z) is down more than -13%, at $23.52, after posting a new 52-week low of $22.55. There is no specific news about the company, but, like LinkedIn, a pile of shares will be available on the market when the company’s lock-up period ends in about another two months.

Stay tuned for Tuesday. In addition to the earnings reports we’ve mentioned, here’s a list of other noteworthy events (all times Eastern):

• 7:45 a.m. – International Council of Shopping Centers-Goldman Sachs retail sales report
• 8:30 a.m. – US third-quarter GDP report revisions
• 8:30 a.m. – BEA corporate profits report
• 2:00 p.m. – Federal Open Market Committee minutes released

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Paul Ausick

Gold is at $1,766, down 0.74%.

Hong Kong’s Hang Seng closed down 1.44% to 18,226.

Japan’s Nikkei closed lower by 0.32% to 8,348.

The U.S. 10-year is at 1.95%, down 0.o6%.

The FTSE is down 1.52% to $5,281.

The DAX is down 2.43% to $5,660.

Pharmasset, Inc. (NASDAQ: VRUS) is up 86.18% premarket to $135.30, relative to a 52-week range of $20.49 – $88.52.

Research in Motion, Ltd. (NASDAQ: RIMM) is down 2.75% premarket to $17.69, relative to a 52-week range of $17.17 – $70.54.

Gilead Sciences, Inc. (NASDAQ: GILD) is down more than 6% before market open to $37.46, relative to a 52-week range of $35.28 – 43.49.

Gilead is placing a huge bet on its hepatitis C treatments at $137.00 per share.  The deal is also an all-cash deal.  Pharmasset has recently moved into late-stage hepatitis C drug and it currently plans on two additional late-stage trials in 2012.

Pharmasset was an attractive company, but this one seems like Gilead is spending above and beyond a normal amount here to close this deal.  While less was known 12 or 18 months ago, Gilead would have been in close enough of the same position to have done a deal then at a far lower price.  Still, that would have required knowing its drugs were going to live up to expectations.

Analysts expect virtually no revenues from Pharmasset for the next 24 months and Gilead has a market cap of $29.9 billion.

JON C. OGG

OmniVision Technologies (NASDAQ: OVTI) is down 17.5% before market open to $14.28, relative to a 52-week range of $12.60 – $37.04.

Pharmasset, Inc. (NASDAQ: VRUS) is up 8.5% before market open to $74.80, relative to a 52-week range of $19.62 – $88.52.

ReneSola Ltd. (NYSE: SOL) is down more than 5% premarket to $2.25, relative to a 52-week range of $1.46 – $14.13.

TKLC (NASDAQ: TKLC) is up 10.4% before market open to $10.93, relative to a 52-week range of $5.64 – $13.98.

Some investors might have guesses that Apple Inc. (NASDAQ: AAPL) is among those stocks that are up the most, especially after it hit yet another all-time high this week. But Apple and its 27% move this year  does not even come close. We screened out companies with market capitalization rates which had not reached the $100 million mark at some point this year and we put a $5.00 minimum share price in this screen as well. We also set an average daily volume of 200,000 shares. We also removed the companies which are up due to a merger premium. While we didn’t set this as a minimum threshold, all of these stocks have risen more than 100% year-to-date.

The best performing stocks within the criteria screened are as follows: Genetic Technologies Ltd. (NASDAQ: GENE); Coffee Holding Co.Inc. (NASDAQ: JVA); Pharmasset, Inc. (NASDAQ: VRUS); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Silicon Motion Technology Corp. (NASDAQ: SIMO); MAKO Surgical Corp. (NASDAQ: MAKO); and Richmont Mines Inc. (AMEX: RIC). We have outlined the performance and the catalysts on each, as well as offered commentary on what lies ahead for each.

Genetic Technologies Ltd. (NASDAQ: GENE) is up the most of all the screened stocks so far this year with a gain of about 450%, but the caveat is that it is down substantially from its year highs as well. At $5.86, the 52-week trading range is $0.65 to $10.75, and it trades about 250,000 shares per day. This one has a market capitalization of only about $79 million, but that had been north of $100 million earlier this year.

The company is actually a genetic testing servicing company offering screening services for humans and animals, and it is located in Australia. A capital raise in Australia hurt the stock over the summer and the stock has not really recovered since. The company has launched a new breast cancer test in America, and it has filed patent infringement suits for its primary non-coding patent against at least ten companies this year. While shares had already risen sharply in January, it was the April approval of that breast cancer test that caused shares to skyrocket. We find it interesting that almost no analyst coverage exists on this company.

Jon C. Ogg
June 11, 2007

Jon C. Ogg
June 7, 2007

Jon C. Ogg
June 6, 2007