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Stock picks by the pros
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October 8, 1999: 12:54 p.m. ET
Biogen, Amgen, Global Crossing, USA Networks all get nod
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NEW YORK (CNNfn) - Analysts and money managers showed enthusiasm Friday for various biotech and tech stocks, among others. Here are some of the stocks recent guests on CNNfn are buying and why:
Biogen's (BGEN) blockbuster drug Avonex for treating multiple sclerosis is not only "exciting", says Franklin Berger, director of biotechnology at J.P. Morgan Securities, but the clinical evidence behind its usage is also "compelling." "It shows you can arrest the disease and slow it down dramatically. For those diagnosed with MS [who experience brain damage], Biogen`s drug stops that right from the start. MS is a disease for which there is a great need for treatment and there hasn't been one until the last two or three years. Therefore, I think the growth in sales and profitability at Biogen is really still at a very steep ascent."
Another strong stock, says Berger, is Amgen (AMGN). That company, says Berger, "is certainly a very strong focus of our search, because they have a drug called NESP, a new kind of EPO [epoetin alfa, for the treatment of anemia associated with chronic kidney failure] for people on dialysis., which makes red blood cells grow. This is necessary for patients on dialysis and something, increasingly, that oncology patients are receiving. It's a market growing past $3 billion. And it`s on its way to 30 to 40 percent growth for the next few years."
"We`re also looking at some smaller companies," says Berger. One of them is Alexion Pharmaceuticals (ALXN), which is looking at the anti-inflammation pathways in heart disease. There was an interesting article in the Wall Street Journal, yesterday, about how inflammatory pathways in the body may actually induce heart attacks or make heart disease worse. Both Genentech (DNA) and Alexion are looking at unique new molecules that would affect that. These are new classes of drugs, new ways of looking at heart disease never tried before."
At the moment, Berger admits, biotech stocks are a little pricy. "They are getting expensive. We completely agree with that. But at the same time we expect to see this trend to continue for several reasons. The growth we`re seeing at Amgen or Biogen, for example, rates of growth of about 25 to 35 percent, is unseen in other sectors of the market. We`re seeing very positive earnings trends, very positive revenue trends. We`re seeing the pipelines fill up, market launches of blockbuster drugs coming. Therefore the news flow is positive. Therefore, I don`t see any reason to expect a change in the positive trend."
The current investing environment, says Barry Hyman, senior equity analyst with Ehrenkrantz, King & Nussbaum, "is a growth market. The market is still going to reward (investors with) above-average growth."
On the other hand, continues Hyman, "We are not buying the Sun Microsystems or the Intels here. We`re looking for dips to buy particular stocks and using the fourth quarter to (scoop up) stocks that are down on their highs."
Two stocks that fit the criteria, says Hyman, are media and e-commerce pick USA Networks (USAI) and retailer J.C. Penney (JCP).
Up ahead on CNNfn this afternoon:
John Hughes, market analyst at Shields & Co., sees plenty of opportunity in three hot stocks. The first is Qwest Communications (QWST), about which he says the stock is "poised for higher prices, the stock has pulled back".
Another Hughes pick is Global Crossing (GBLX): "The stock has had a base building period, it is now poised for higher prices".
View these stocks picks and others at 2:45pm ET on CNNfn. 
The views presented here are solely those of the analysts quoted. They do not represent the opinions of CNNfn on whether to buy or sell shares of a particular stock.
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