NEW YORK (CNNMoney.com) - Genentech, the second-biggest biotech in the world, just got cheaper.

Analysts, while bullish on the company's performance, have criticized Genentech (up $1.07 to $81.70, Research)'s stock for being too pricey.

But now analysts are starting to see a better deal, after the biotech beat expectations with its first quarter earnings report. Genentech reported a 39 percent sales jump to $1.6 billion for the quarter, while Thomson Financial had consensus estimates projecting a 35 percent increase. Also, Genentech reported earnings per share of 46 cents for the quarter, compared to a consensus projection of 41 cents.

"I think it used to be expensive, but it's come down to a level where it's quite attractive," said Shiv Kapoor, a biotech analyst for investment firm Montgomery & Co. "They're making drugs for cheaper than I and the Street expected."

Not only has the biotech has managed to control costs, said Kapoor, but its Monday filing with the FDA for an additional use for the drug Avastin could lock in more revenue for the future. Sales of Avastin, currently marketed for metastatic colorectal cancer, totaled $398 million in first quarter, a jump of nearly 100 percent from the first quarter in 2005. On Monday, Genentech filed an application to the Food and Drug Administration to use the drug as a treatment for a specific type of lung cancer. Kapoor projects that this lung cancer use could result in an additional $1.6 billion in annual sales by 2010.

Genentech's stock price dipped about one percent in after-hours trading. Kapoor said investors were reacting to the lower-than-expected 8 percent sales increase for Rituxan, a treatment for rheumatoid arthritis and non-Hodgkin's lymphoma. "I think the stock will recover," said Kapoor.

In Tuesday's trading prior to the after-hours earnings report, Genentech's price/earnings ratio was 44, compared to 19 forAmgen (down $0.50 to $70.24, Research), the biggest biotech in the world.

Leah Cann, analyst for Foresight Research Solutions, said on Tuesday following the earnings report that she did not consider the stock to be expensive. Cann noted that sales for the breast cancer drug Herceptin, which increased 123 percent and totaled $290 million for the first quarter, also beat expectations is one of the prime drivers to company value.

"I see this as an extremely strong quarter," said Cann. "To me, the stock looks oversold."

The analysts interviewed for this story do not own stock in the companies mentioned here.

To read about the future of biotech, click here.