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 Reports and Commentary from the Investment World

Reports and commentaries are posted here on a regular basis.


Genentech Inc


Genentech (DNA:NYSE) 2003-07-23

Genentech is the second largest biotech in the world, but few people seem to have heard of it.

The principal activities of the Group are to discover, develop, manufacture and market human pharmaceuticals using human genetic information.

The Group manufactures and markets nine protein-based pharmaceuticals and licenses several additional products to other companies. Herceptin, Rituxan, TNKase, Activase, Nutropin Depot, Nutropin AQ, Protropin, Pulmozyme, etc. are some of the registered trademarks owned by the Group. Product sales accounted for 74% of revenues; royalties 12%; contract and other revenues, 9% and interest income, 5%. The best selling in-house drugs are Rituxan for non Hodgkins lymphoma and Herceptin for breast cancer.

Last year Genentech grew total net income by 30%. At present it has 20+ drugs in clinical trials. This gives it the richest drug pipeline in the biotech world. The company is worth $30 billion. It has $1.2 billion in cash and another $1.2 billion in long term investments, $6.7 billion in total assets and almost no long term debt.

Genentech expects to grow earnings 20% per annum through to 2005. This company has been overlooked by most of the major brokerage houses.

We see great value here. Compared to its peers Genetech looks cheap at the moment. The shares have already started to move upwards over the last couple of months, but there is still plenty of upside potential from here.

Buy Genentech ( DNA:NYSE) up to $ 58.00.


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.