The Best of ‘Big’ BioHealth in 2010 (ILMN, ITMN, INCY, THRX, VPHM)
2010 has been an interesting year for biotech and biohealth investors. While we have had far fewer of the ‘ten-bagger ambitions’ in 2010 with exponential gains, there have been many key winners. In the “$5 billion and over” category of market caps, Illumina Inc. (NASDAQ: ILMN) is the surprise winner of the biohealth players. In the $1 billion to to $5 billion category, we have several winners including shares of InterMune Inc. (NASDAQ: ITMN), Incyte Corporation (NASDAQ: INCY), Theravance Inc. (NASDAQ: THRX), and ViroPharma Inc. (NASDAQ: VPHM). We have taken a look at what has driven the gains as well as what the prospects are for 2011 and beyond.
Illumina Inc. (NASDAQ: ILMN) is sort of surprising in the $5 billion and higher category considering that it develops, manufactures, and markets integrated systems for the analysis of genetic variation and biological function. It is on the equipment and systems side of the biohealth equation. Still, it appears to be the preliminary winner in biohealth for companies in the $5 billion and higher market cap. At $63.50, shares have more than doubled from its 52-week low of $29.58 and shares are down only about 5% from the high of $66.59. After the performance, the market cap is now approaching $8 billion. Unfortunately, the consensus analyst target is currently around $60.00 per share. Thomson Reuters has analyst revenue projections of $888.03 million for all of 2010 and $1.08 billion for 2011.
And the $1 billion to $5 billion category of market capitalization rates for biohealth stocks…
InterMune Inc. (NASDAQ: ITMN) makes the grade as we were looking for those performing from recoveries, but the caveat here is that many hard losses were felt. At $38.35, its 52-week trading range is $8.34 to $49.46 and it closed out 2009 at $13.04 giving it roughly 200% gains year to date. Analysts have a consensus price target of $39.17. What is driving InterMune is the recent gains made from Esbriet (pirfenidone) with a recommended E.U. approval against Idiopathic Pulmonary Fibrosis. FULL COVERAGE
Incyte Corporation (NASDAQ: INCY) is a close call here with shares up almost 100% from the 52-week lows… With shares trading around $16.95 with nearly a $2.1 billion market cap, its 52-week trading range is $8.50 to $17.48. Incyte closed out 2009 at $9.11, so shares are up close to 75% for the year. The consensus analyst price target is just above $21.00, giving it the most remaining implied upside if you trust analysts. This was covered back at the start of the year as being one of several biohealth stocks having the most implied upside. Shares are up on positive late-stage human study results over its bone marrow cancer drug. Analysts from Thomson Reuters see $169.6 million for 2010 revenues and $107.7 million for 2011 revenues.
Theravance Inc. (NASDAQ: THRX) is currently around $26.75 with a $1.97 billion market cap and against a 52-week trading range of $9.62 to $28.84. The stock ended 2009 at $13.07, so shares are up right at 100% year to date. The average analyst price target is $25.83, so analysts see the stock being close to fully valued. This one is also a late-year runner and its gains have been tied to having raised $129 million from GlaxoSmithKline PLC (NYSE: GSK), a vote that its joint-development of Relovair as a new lung disease and asthma drug is going well. At issue here is that the revenue story is a ways off with Thomson Reuters seeing only $23.6 million in 2010 revenues and $29 million for 2011 revenues.
ViroPharma Inc. (NASDAQ: VPHM) is at $17.80 with a $1.4 billion market cap and a 52-week trading range of $8.18 to $18.37. Shares ended 2009 at $8.39, so shares are up over 100% for the year. The average analyst price target is almost $19.50, so some implied upside is still expected. Products include Cinryze for routine prophylaxis against angioedema attacks and Vancocin for treatment of antibiotic-associated pseudomembranous colitis caused by Clostridium difficile and enterocolitis caused by Staphylococcus aureus and MRSA strains. Thomson Reuters sees revenues for 2010 at $423.2 million and $344.4 million for 2011.
Stay tuned this week as we run all of the-bagger candidates whose shares have run up exponentially and which still have market capitalization rates of under $1 billion.
JON C. OGG
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