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Lehman Brothers downgraded CancerVax (CNVX
) to neutral from positive.
Analyst Craig Parker thinks current valuations have discounted the positive attributes of the biotechnology sector. As a result, he downgraded the sector. He notes the sector has achieved a level of financial maturity reflected in product sales of $30 billion-plus, an average operating margin for profitable companies of 34%, and sales growth of 20%-plus.
However, Parker believes with increased reimbursement pressures, intensfied competition in most categories, and anticipated deceleration in sales growth in 2005, the sector could trade at a discount to historic levels for the next 12 months.