From Standard & Poor's Equity Research
Genentech (DNA) shares fell on Sept. 11 on news that the FDA has requested additional information on Avastin. RBC Capital kept an outperform opinion on the stock.
Analyst Jason Kantor says the complete response letter for Avastin in breast cancer will push approval out about one year to the second half of 2007. He says the news is clearly negative, and removes a significant growth driver in 2007. He cut his 2007 EPS estimate to $2.60, and total Avastin forecast to $2.96 billion.
Kantor notes that both Taxol and Herceptin were approved in breast cancer based on progression free survival endpoint. He says that based on expected solid sales from core products, upside EPS performance from ongoing operations execution, upside from Rituxan in RA, and top management, he keeps an outperform rating. He has a $91 price target on the stock.