Wall Street has so far dealt with a mixed second-quarter report card for biotechnology companies, but shares continue outpacing the broader market on a mix of positive sales results and a bright outlook for buyout potential within the sector.
Overall, biotechnology stock values have surged since Genentech Inc. kicked off the sector's earnings season July 14. The sector received another confidence boost Monday, when Roche Holding offered $43.7 billion in a buyout deal for Genentech.
The American Stock Exchange's biotech index, which tracks the biggest biotech companies, gained nearly 10 percent since July 14. Meanwhile, broader gauges of the market, including The Standard & Poor's 500 index, the technology-laden Nasdaq composite index, and the Dow have all gained about 5 percent in that same period.
Shares of South San Francisco, Calif.-based Genentech have gained about 24 percent since the company's second-quarter report came out, with a sharpest part of that boost coming after the buyout offer.
Though it fell short of Wall Street expectations because of higher costs, profit still rose 5 percent on sales of blockbuster cancer drugs and revenue topped forecasts.
Shares of Cambridge, Mass.-based Biogen Idec Inc. are up about 7 percent since reporting Tuesday that multiple-sclerosis drug sales drove an 11 percent boost in second-quarter profit. The company's adjusted results topped Wall Street forecasts, helping to ease worries that the sales could slow for the key MS drug Avonex.
"The second-quarter results make it clear that Biogen's fundamentals are solid and that the company retains good earnings visibility," Cowen and Co. analyst Eric Schmidt said in a note to investors following the earnings report.
Genzyme Corp. shares are down about 3 percent since reporting results Wednesday. The company's profit, adjusted for a charge, topped forecasts as revenue surged 25 percent on a mix of genetic disorder treatment sales.
Meanwhile, shares of New York-based ImClone Systems Inc. are down slightly Thursday after reporting results that met forecasts on sales of the drug Erbitux. But, the stock had a 14 percent run-up since July 14.
Summit, N.J.-based Celgene Corp., which also reported results Thursday that topped forecasts, saw shares rise 3.9 percent in afternoon trading after bettter-than-expected profit and revenue.
The next major biotech company to report is Thousand Oaks, Calif.-based Amgen Inc., scheduled for Monday.
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