Biotech Enters Reporting Season With Large Caps Central To Sector Performance
Biotech stock stocks enter their earnings season with investors increasingly interested in the long-term outlook for product pipelines, although large-cap growth stocks remain central to the sectors performance, an analyst said Friday.
Credit Suisse's Ravi Mehrotra notes that the sector started the year with a bang, but sank sharply in March on a national debate over drug pricing.
But it's since snapped back with large caps leading the way.
Among the industry giants, Biogen Idec Inc. (NASDAQ: BIIB) reports July 23 and Mehrotra says investors area focused on results from the recent launch of the company's Hemophilia B drug Alprolix and its Multiple Sclerosis drug Copaxone as well as the pending launch of its Hemophilia A drug Eloctate.
Mehrotra expects no earnings surprise nor significant pipeline news, and rates Biogen Overweight with a target of $400.
Another large cap, Gilead Sciences, Inc. (NASDAQ: GILD) is reporting July 23, Mehrotra said the most important headline number will be revenue for the breakthrough hepatitis C drug Sovaldi, which costs $1,000 a day for a 12-week treatment. The U.S. Senate recently launched a probe into Sovaldi pricing.
Mehrotra estimates second-quarter Sovaldi sales of $2.98 billion, slightly ahead of the consensus $2.92 billion. He has an Outperform rating on Gilead with a $110 target.
Large cap Celgene Corp. (NASDAQ: CELG) which Mehrotra rates at Outperform $113 target, is slated to post July 24. Its oral cancer drug Revlimid is with a primary focus, with expected news on the patent litigation. Mehrota sees the drug's second quarter sales in line with the consensus $1.84 billion, representing 15 percent growth from a year ago.
Mehrota doesn't expect a Celgene earnings surprise and rates the company Outperform with a $113 target.
Amgen Inc. (NASDAQ: AMGN), reports July 29 when investors hope to hear updates on trials for the Kyprolis multiple myeloma drug as well as impacts on Amgen products from Hoffmann-La Roche imminent launch of Mircera for anemia that is related to kidney disease.
Mehrotra is Neutral on Amgen with a target of $125.
Among a couple of small cap biotechs, PTC Therapeutics Inc. (NASDAQ: PTCT) is reporting August 7 with investor interest focused on launch plans in Europe for its recently approved Translarna muscular dystrophy drug and progress toward gaining its marketing approval in the U.S.
Mehorota rates PTC at Outperform with a $40 target.
Small cap Clovis Oncology Inc., (NASDAQ: CLVS) a development-stage company, is likely to report in early August when investors will look for additional information on trails for the company's Rupacarib drug for breast cancer drug and ovarian cancer and its drug candidate for hyperglycemia.
Clovis gets and Outperform rating from Mehrotra and a $100 target.
Latest Ratings for CLVS
|Nov 2014||Stifel Nicolaus||Maintains||Buy|
|Aug 2014||JP Morgan||Maintains||Overweight|
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