Top Picks for 2007 from JPMorgan HealthCare Analysts

Saw Pharmion (PHRM) today, but from the back of the room - it was totally packed; looked good. Also saw Vanda (VNDA), nothing special here.

Genomic Health (GHDX) was very well attended, a testament to the huge support they have in Silicon Valley and on Wall Street. The science is top-notch, the application is sexy, but making money is still so-so I would say. CEO Randy Scott is great, and the cause is good, so what can you say? Molecular is the way to go for cancer as cancer is a molecular disease.

In the afternoon I saw Mentor (MNT), Parexel (PRXL), Kindred (KIND), Oncology Therapeutics, etc. Not biotechs really and not too exciting either. King (KG) was not well attended and somewhat boring, too.

Stryker (SYK) – I admit it, I’m hooked on spine, but I can’t help it. Nothing overly exciting at Stryker, just good solid execution and 20% EPS growth. Interestingly, the stock, up 24% in 2006, outperformed Google (GOOG) and Apple (AAPL).

Invitrogen (IVGN) – Since I’m located in San Diego, thought I’d check this one out. Big problems in 2006 and looks like at least another year of corrective action required, but could return to solid growth in 2008.

At lunch today, JPMorgan conducted an informal electronic survey among the 500 or so diners. Some interesting results came out…
54% identified the broad healthcare market as “Market Weight” (vs. over/under weight)
37% identified biotech as the most promising healthcare segment for 2007, and 23% identified specialty pharma.
Genentech (DNA) was voted most likely to succeed in 2007 among the large cap biotechs (over Amgen (AMGN), Gilead (GILD), Genzyme (GENZ), Biogen Idec (BIIB), Celgene (CELG) and MedImmune (MEDI))

Best big pharma – none (among Bristol-Myers Squibb (BMY), Lilly (LLY), Merck (MRK), Pfizer (PFE), Schering Plough (SGP) and Wyeth (WYE))

63% were bullish on generics.

And just for fun, they also looked at politics…
50% thought Hillary Clinton is the most likely Democratic presidential candidate (or maybe wished she would be).
50% thought John McCain is the most likely Republican presidential candidate.

And most importantly, not by vote, but from the JPM analysts, the top picks for 2007 are:

Big Pharma – Wyeth [WYE]
Generics – Barr (BRL) (guess they’re expecting a turnaround)
Biotech – Celgene [CELG] and Biogen Idec [BIIB]
Diverse – Abbott (ABT) and Baxter (BAX)

Disclosure: Centient management holds a position in Genentech shares and does consulting work for Genentech.

Comments

[GregCalderone]

Sorry, but huge cramer fan. He liked GILD and TMO before they presented. Also, 4 small cap drug stocks are heading toward fda approval and will likely double this year, or early next year. SVNT, IDEV, SNUS, and BMRN. Biotech is one field that is not usually moving together as a unit. It is pipeline driven. These will double for no other reason than they are nearing their fda approval. I follow Cramer pretty closely, cramersez.com or thestreet.com are good sites to keep tabs on his picks.