Amgen Off, Genzyme Up on Broker Move

Genzyme (GENZ) shares rose while Amgen's (AMGN) fell after Credit Suisse First Boston Tuesday recommended swapping into the former and out of the latter.

CSFB analyst Mark Augustine Tuesday upgraded Genzyme to outperform from neutral, telling investors the company has 24% upside potential in the next 12 months because of the recent deals it's made. Meanwhile, Augustine downgraded Amgen to neutral from outperform, telling investors the company lacked near-term catalysts to drive shares higher.

"We believe that Myozyme filings could occur in 2004, ahead of guidance. This could be a key stock catalyst [for Genzyme,]" said the analyst, in his upgrade. "We are also downgrading Amgen shares and recommend a swap into Genzyme. We believe Genzyme offers more compelling stock catalysts." (CSFB does and seeks to do business with the companies covered in research reports.)

In reaction to the rating changes, shares of Genzyme rose 37 cents, or 0.8%, to $47.05, while Amgen fell 45 cents, or 0.8%, to $54.75.

So far this year, Genzyme shares have fallen 5% amid a number of deals and acquisitions, which has diluted earnings and made handicapping its finances far more difficult. But the analyst said the company is likely to provide more financial guidance when it releases earnings on July 14, which will remove an overhang on the company's shares.

But while Amgen shares are off 11% year-to-date, twice Genzyme's stumble, Augustine said it lacks catalysts to drive share appreciation. Specifically, the analyst noted the company's slowing earnings growth, a need to replenish its pipeline and the recent failure of the company's Parkinson's treatment in phase 2 testing.

"In the biotechnology sector, we maintain that valuation alone is not sufficient to drive sustained stock performance," said the analyst. "Catalysts are needed, and we have a hard time finding them with Amgen. Thus, while Amgen shares may have bottomed, factors that presage the next ascent are tough to envision."

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