U.S. Bancorp Piper Jaffray Publishes Genomics Discovery Overview Report
NEW YORK, Aug. 12 /PRNewswire-FirstCall/ -- Select genomic drug discovery
names should continue to outperform through the remainder of this year and
into 2004, according to a recently published report titled, Genomics Discovery
Industry Overview by U.S. Bancorp Piper Jaffray Senior Research Analyst Edward
Tenthoff. Tenthoff believes fundamental progress including clinical
milestones, Investigational New Drug (IND) filings and new collaborations will
drive the industry.
According to Tenthoff, a separation of quality has occurred in the
genomics sector that is only now beginning to reflect in the valuations of
emerging winners. "We believe this valuation disconnect still offers investors
with attractive entry points to build long-term positions in genomic discovery
names that are providing the future targets to the drug industry," said
In addition, Tenthoff analyzes the near-term future of the genomics
industry, stating that he expects the remainder of 2003 to be a stock picker's
environment with potential event-driven trading opportunities throughout the
year. "While we believe the summer may represent a period of consolidation of
recent gains in the sector, we expect several well-funded, differentiated
discovery companies to be positioned for big returns in fourth quarter 2003
and into next year," said Tenthoff.
"We believe that target-discovery identification and drug development,
though risky, offer the greatest potential return on genomic discoveries,"
said Tenthoff. "Investors should remain focused on high-quality, well-funded
names with upcoming valuation drivers including clinical milestones, IND
filings and collaborations."
Proteomics, a post-genomic discovery approach, is another key aspect of
the genomics discovery industry. Tenthoff states that while most proteomics
discovery companies are focused exclusively on the protein, most early
genomics companies have subsequently built out extensive proteomic
capabilities. He believes that integrated genomics and proteomics research
will provide the best targets.
"We suggest that now is the time to buy genomic discovery names," said
Tenthoff. "We see genomic and proteomic research providing the future targets
and compounds for the drug industry. With the tide turning, we have seen some
of these stars of tomorrow offering some of the biggest returns in the biotech
Tenthoff currently covers Celera Genomics Group (CRA, #, $9.55) with an
Underperform rating, Exelixis Inc. (EXEL, #>, $6.31) with a Strong Buy rating
and a 12-month price target of $11 (12x 2004 revenues of $65 million), Human
Genome Sciences Inc. (HGSI, #>, $12.45) with an Outperform rating and a 12-
month price target of $15 (projected enterprise value of $800 million based on
clinical pipeline) and Lexicon Genetics Incorporated (LEXG, #, $4.91) with an
Outperform rating and a 12-month price target of $8 (10x 2004 revenues of
To receive a copy of Genomics Discovery Industry Overview, clients and
members of the media should contact Susan Beatty at firstname.lastname@example.org or
U.S. Bancorp Piper Jaffray, a subsidiary of the consolidated group of U.S.
Bancorp (NYSE: USB), is a focused securities firm comprised of two revenue-
generating segments -- Capital Markets and Private Client Services. Clients
of both segments are supported by Investment Research, an independent group
reporting to the CEO. The firm provides a full range of investment products
and services to individuals, institutions and businesses. The firm has over
124 offices in 25 states across the country. U.S. Bancorp offers a
comprehensive range of financial solutions through U.S. Bank, U.S. Bancorp
Asset Management, U.S. Bancorp Investments and U.S. Bancorp Piper Jaffray. For
more information on U.S. Bancorp Piper Jaffray, visit www.piperjaffray.com .
Investment Opinion: Investment opinions are based on each stock's return
potential relative to the overall market*, not on an absolute return.
Strong Buy: Expected to outperform the relevant broader market index over
the next 6 to 12 months. An identifiable catalyst is present to drive
Outperform: Expected to outperform the relevant broader market index over
the next 12 to 18 months.
Market Perform: Expected to perform in line with the relevant broader
market index over the next 6 to 12 months.
Underperform: Expected to underperform the relevant broader market index
over the next 6 to 12 months.
* Broader market indices = Russell 2000 and S&P 500
Volatility Rating: Our focus on growth companies implies that the stocks
we recommend are typically more volatile than the overall stock market. We are
not recommending the "suitability" of a particular stock for an individual
investor. Rather, it identifies the volatility of a particular stock.
Low: The stock price has moved up or down by more than 10% in a month in
fewer than 8 of the past 24 months.
Medium: The stock price has moved up or down by more than 20% in a month
in fewer than 8 of the past 24 months.
High: The stock price has moved up or down by more than 20% in a month in
at least 8 of the past 24 months. All IPO stocks automatically get this
volatility rating for the first 12 months of trading.
The following disclosures apply to stocks mentioned in this report if and
as indicated: (#) U.S. Bancorp Piper Jaffray (USBPJ) was making a market in
the Company's securities at the time this research report was published. USBPJ
may buy and sell the Company's securities on a principal basis. (^) A USBPJ
analyst who follows this Company or a member of the analyst's household has a
financial interest (a long equity position) in the Company's securities. (@)
Within the past 12 months, USBPJ was a managing underwriter of an offering of,
or dealer manager of a tender offer for, the Company's securities or the
securities of an affiliate. (>) USBPJ has either received compensation for
investment banking services from the Company within the past 12 months or
expects to receive or intends to seek compensation within the next three
months for investment banking services. (~) A USBPJ analyst who follows this
Company, a member of the analyst's household, a USBPJ officer, director, or
other USBPJ employee is a director and/or officer of the Company. (+) USBPJ
and its affiliates, in aggregate, beneficially own 1% or more of a class of
common equity securities of the subject Company. (=) One or more affiliates of
U.S. Bancorp, the ultimate parent company of USBPJ, provided commercial
banking services (including, without limitation, loans) to the Company at the
time this research report was published.
Nondeposit investment products are not insured by the FDIC, are not
deposits or other obligations of or guaranteed by U.S. Bank National
Association or its affiliates, and involve investment risks, including
possible loss of the principal amount invested.
USBPJ research analysts receive compensation that is, in part, based on
revenues of USBPJ Equities and Investment Banking, which include overall
investment banking revenues. USBPJ research analysts who follow this Company
report to the Head of Investment Research who, in turn, reports directly to
the Chief Executive Officer of U.S. Bancorp Piper Jaffray.
This material is based on data obtained from sources we deem to be
reliable; it is not guaranteed as to accuracy and does not purport to be
complete. This information is not intended to be used as the primary basis of
investment decisions. Because of individual client requirements, it should not
be construed as advice designed to meet the particular investment needs of any
investor. It is not a representation by us or an offer or the solicitation of
an offer to sell or buy any security. Further, a security described in this
release may not be eligible for solicitation in the states in which the client
resides. Officers or employees of affiliates of U.S. Bancorp Piper Jaffray, or
members of their families, may have a beneficial interest in the Company's
securities and may purchase or sell such positions in the open market or
Notice to customers in the United Kingdom: This report is a communication
made in the United Kingdom by U.S. Bancorp Piper Jaffray to market
counterparties or intermediate customers and is exclusively directed at such
persons; it is not directed at private customers and any investment or
services to which the communication may relate will not be available to
private customers. In the United Kingdom, no persons other than a market
counterparty or an intermediate customer should read or rely on any of the
information in this communication.
Securities products and services offered through U.S. Bancorp Piper
Jaffray, member SIPC and NYSE, Inc., a subsidiary of U.S. Bancorp.
Additional information is available upon request.
SOURCE U.S. Bancorp Piper Jaffray