Markets & Finance

S&P Says Buy Genzyme


Genzyme (GENZ): Maintains 5 STARS (buy)

Analyst: Frank DiLorenzo

Genzyme reported fourth-quarter revenue of $479 million, vs. $298 million, on growth across products and the inclusion of products added through acquisitions and corporate consolidation. Fourth-quarter Renagel sales of $81 million were $3 million above S&P's projection. Cerezyme sales of $198 million were $24 million above S&P's view, aided by a strong foreign-exchange impact and continued solid demand. Fabrazyme sales at $32 million were $4 million above S&P's projection. S&P is upping the 2003 and 2004 earnings per share estimates a penny each, to $1.39 and $1.81. Based on a

discounted cash-flow model, S&P sees Genzyme as sizably undervalued against S&P's 12-month target price of $70.

Borders Group (BGP): Maintains 4 STARS (accumulate)

Analyst: Jason Asaeda

Bookseller Borders posted better-than-expected holiday sales of $1.2 billion. Comp-store sales rose 2.0% at Borders stores, and international sales grew 28%, vs. S&P's flat and 25% projections. Sales at Waldenbooks stores fell 2.7%, as expected. With stronger overall sales, which S&P sees ongoing into fiscal 2005 (Jan.), S&P is upping the fiscal 2004 operating earnings per share estimate by 7 cents, to $1.55, and fiscal 2005's by 4 cents, to $1.64. S&P looks for modest

price-earnings expansion on shares now at a discount to peers, and is raising the 12-month target price to $23 from $21, applying a peer-average p-e of 14 times S&P's fiscal 2005 estimate.

Abbott Laboratories (ABT): Maintains 4 STARS (accumulate)

Analyst: Frank DiLorenzo

Abbott plans to buy TheraSense, a marketer of small blood glucose monitors, for $1.2 billion ($27 cash per share). S&P sees TheraSense's FreeStyle products complementing Abbott's Precision glucose monitors. Abbott expects the deal to close in the second quarter, pending approvals, with a 1 cent dilution to earnings per share in 2004 and accretion in 2005. S&P thinks there may be some overlap and integration problems, so S&P is neutral on the deal. S&P is also lowering the 2004 earnings per share estimate to $2.51, from $2.55, and the 2005 estimate by 1 cent, to $2.82. S&P's 12-month target price remains $54, based on a discounted cash-flow model.


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