dna

"How does one go about investing in the antibody space?" asks biotech specialist John McCamant. In The Medical Technology Stock Letter, he eyes Immunogen (NASDAQ: IMGN), and offers an in-depth report for biotech-savvy readers.

"As background, T-DM1 is a second generation Herceptin that may even exceed the original in sales because the armed antibody has been more potent to date by showing effectiveness in mBC patients who have failed either Herceptin or Tykerb.

"The company will continue to benefit from Genetech's extensive antibody experience as they continue to run all development for Immunogen's T-DM1.

Analyst upgrades:

• Bernstein upgraded Merck (NYSE: MRK) to Outperform from Market Perform and raised its target to $30 from $27 citing valuation and its decision to buy Schering-Plough, at what appears to be a reasonable price.
  
• RBC Capital upgraded Palm (NASDAQ: PALM) to Outperform from Sector Perform and raised its target to $12 from $5 as it believes webOS has increased its chances for Smartphone leadership and will increase its attractiveness as an acquisition target.
  
• RW Baird upgraded Alcatel-Lucent (NYSE: ALU) to Outperform from Neutral on valuation as it believes balance sheet risks are overly discounted in the stock, creating a buying opportunity. The firm has a $3 target on shares.
• Express Scripts (NASDAQ: ESRX) was raised to Buy from Hold at Argus.
  
• France Telecom (NYSE: FTE) was upgraded at Morgan Stanley to Equal Weight from Underweight.
  
• Foster Wheeler (NASDAQ: FWLT) was upgraded to Conviction Buy from Neutral at Goldman.

This post was written by Minyanville Contributor Steve Smith.

Pharmaceuticals have been alive and merging. The most recent deal is this morning's news that Gilead (NASDAQ:GILD) wants CV Therapeutics (NASDAQ:CVTX), which comes on the heals Roche's purchase of Genentech(NYSE:DNA) and Merck's (NYSE:MRK) proposed merger with Schering Plough(NYSE:SGP).

U.S. stock futures were lower once again Thursday morning. After the first two days of gains that Wall Street had in a few weeks, a third day looks unlikely.

[Update: A surprising retail sales report, with a lower decline than expected, has futures mixed at this time. Jobless claims, however, rose more than expected.]

Stocks overseas stalled after the World Bank predicted --ahead of the G20 finance ministers meeting -- the global economy might shrink 1-2% this year. Another Big Pharma mega-deal as Genentech (NYSE: DNA) agreed to a buyout from Roche worth $48.6 billion couldn't offset the view the recent two-day rally could be sustainable.

Analyst upgrades:

• ING upgraded Roche (OTC: RHHBY) to Buy from Hold as it believes Roche will not pay more than $100/share for Genentech (NYSE: DNA) and that the Avastin adjuvant data due April 2009 provides significant upside potential.
  
• Oppenheimer upgraded Motorola (NYSE: MOT) to Outperform from Perform on valuation as it believes sentiment is at an all-time low and the stock has limited downside. The firm set a $5 target on shares.
  
• Morgan Stanley upgraded Comerica (NYSE: CMA) to Equal Weight from Underweight citing valuation that adequately reflects credit deterioration in its commercial-heavy loan portfolio and aggressive government action.
• Cheesecake Factory (NASDAQ: CAKE) and Nucor (NYSE: NUE) were upgraded to Buy from Neutral at Goldman.
  
• Pinnacle Entertainment (NYSE: PNK) was raised to Overweight from Equal Weight at Barclays.

News events of the day are providing a dramatic illustration that not all biotech companies are the same.

Just as President Obama lifted the executive order banning the use of embryonic stem cells for research, Roche and Genentech (NYSE: DNA) appear to have reached an agreement on Roche's bid to acquire the 44% of DNA that Roche does not currently own.

Shares of biotech companies engaged in stem cell protocols rallied after the Obama announcement. While most of these companies are small in size with stock prices below $2 per share, the announcement gave impetus to price increases of 17% to 100%.

Analyst upgrades:

• Keefe Bruyette upgraded AmeriCredit (NYSE: ACF) to Market Perform from Underperform as it believes the company's warehouse facility amendments substantially reduce the risk of bankruptcy in the near term. The firm has a $6 target on the stock.
  
• Thomas Weisel upgraded Suntech (NYSE: STP) to Market Weight from Underweight on valuation following the recent weakness. The firm has a $6 target on the stock.
  
• Banc of America/Merrill upgraded Kohl's (NYSE: KSS) to Buy from Neutral on valuation following the recent weakness and believes the company's guidance is achievable.
• Dr. Pepper Snapple (NYSE: DPS) was upgraded to Buy from Neutral at Goldman.
  
• Digital River (NYSE: DRIV) was raised to Buy from Hold at Deutsche Bank.
  
• Clorox (NYSE: CLX) was upgraded at Barclays to Equal Weight from Underweight.

With news of the Merck/Schering-Plough merger, Roche (RHHBY) is nearing a deal with Genentech's (NYSE: DNA) board that would give Roche the remaining 44% of Genentech that it doesn't already own. Reports from the Wall Street Journal suggest that the two companies may have been close to a deal Monday afternoon, with timing and closing conditions yet to be agreed upon. In fact, the Journal noted that these terms could cause the deal to fall apart.

Roche is offering $95 per share for the remaining Genentech's shares, up from Friday's offer of $93 per share, which was already higher than the earlier offer of $86.50 per share. Reportedly, Genentech's board has pegged the company's worth at $112 per share. However, Roche's chairman noted that this price is not realistic, stating the firm's current offer is still fair.

Finally, a morning where stocks are set to bounce at the open as some positive signs pushed U.S. stock futures higher. As investors await Federal Reserve Chairman Bernanke's comments, there were some positive signs from the banking sector and on the deals front.

Citigroup (NYSE:C)'s Pandit said the bank was profitable during the first two months of the year. Also, Dow Chemical (NYSE: DOW) decided tentatively to go ahead with its acquisition of Rohm & Hass (NYSE: ROH) after all. There were also reports Genentech (NYSE: DNA) was on the verge of being fully acquired -- all coming a day after the mega-deal between Merck (NYSE: MRK) and Schering Plough (NYSE: SGP).

We had the possibility of three or four big mergers today and no major macroeconomic news to rock us down other than added overseas selling. But a general lack of enthusiasm and additional selling from the public kept today from chasing the late Friday stock market gains. Even a slighty less pessimistic Nouriel Roubini, a.k.a. "Dr. Doom," failed to inspire any contrarian thoughts. Despite this, there were many winning stocks and sectors.

Here are today's unofficial closing bell levels:

Dow 6,523.48 -103.46 (-1.56%)
S&P 500 676.53 -6.85 (-1.00%)
Nasdaq 1,268.64 -25.21 (-1.95%)
Top Analyst Calls

Today was one of those strange Friday sessions where you just never felt stable. Interestingly enough, the 8.1% unemployment rate ended up moving the market up briefly, but only briefly. Most of the day was spent in red numbers with a rally that brought the markets back to a flat close.

The focus is still on what is coming out of Washington D.C. and just how long and how deep this recession is going to be.

Here are today's unofficial closing bell levels:
Dow 6,626.94 +32.50 (+0.49%)
S&P 500 683.39 +0.84 (+0.12%)
Nasdaq 1,293.85 -5.74 (-0.44%)
Top Analyst Calls

Genentech (NYSE: DNA) closed at $84.70. Roche launched a hostile cash tender offer of $86.50 for DNA after DNA's board rejected Roche's $89 cash bid to buy the balance of the 44% of DNA it does not own. Roche recently sold $16 billion of bonds to finance its takeover of DNA. DNA is expected to receive final results of the adjuvant colorectal trial for Avastin (NSABP C-08) as early as mid-April 2009. DNA March option implied volatility is at 33; June is at 38; below its 26-week average of 40, according to Track Data, suggesting decreasing price movement.

NASDAQ 100-QQQQ overall implied volatility at 37; 26-week average is 46.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

One of the buzzwords that is currently in vogue in the investment community is biotechnology. This is a broad-based field that covers technological applications in any biological system, meaning humans, animals, agriculture, and medicines. This is a booming science and the investment field offers many opportunities for wealth accumulation.

If you don't want to spend countless hours trying to understand not just financials, but scientific and technical jargon that biotech companies harbor, exchange-traded funds (ETFs) may be the better choice for investing in the biotechnology industry.

An ETF is similar to buying a share of a company, but instead of getting one particular company you're investing in a bundle of companies within a particular field or specialty. It's a great way to invest in something you believe in while still hedging your bets and having a bit of diversity.

Amazon.com (NASDAQ: AMZN) reported fourth-quarter earnings that topped Wall Street's expectations late Thursday. The online retailer's fourth-quarter profit rose 9% to $225 million, or 52 cents per share, trouncing expectations of 39 cents per share. Revenue rose 18% to $6.7 billion, again exceeding analyst estimates for $6.4 billion. Even for the current quarter Amazon gave guidance that was better than expectations. AMZN shares are soaring about 15% in premarket trading.

Procter & Gamble (NYSE: PG), a Dow component, reported earnings this morning, meeting analyst expectations of a $1.58 per share profit for the quarter. P&G's quarterly profit jumped 53% due to a gain from the sale of its Folgers coffee business. One problem, though, sales unexpectedly declined 3% to $20.37 billion. PG shares traded 2.8% lower in premarket action.

Roche is cutting the amount of money it is offering for Genentech (NYSE: DNA) from $44 billion, or $86.50 a share, to $42 billion. The Genentech board had hoped for a higher price, but Roche may find itself hampered by the credit crisis.

According to Reuters, ""Roche had initially aimed to acquire the remaining shares through a negotiated settlement -- an offer rejected by Genentech -- and decided to appeal directly to shareholders after further talks failed to reach an agreement.". All the Genentech board can do now is recommend shareholders shun the deal.