Report Card: Glenn Reicin

Glenn Reicin Morgan Stanley Dean Witter
	Report Card 2* Overall rank 2* Rank by institutions 15* Rank by stock picking Makes money for me Saves me from disaster Makes me think Tells the truth Meaningful service, not overkill Well-connected *Out of 26. Best star rating is 3 stars. Click here for our methodology.
2nd Place Health Care Equipment and Supplies

Bio

B.A., Brandeis University; M.B.A., Harvard University. Reicin covers hospital supply, medical technology and pharmaceuticals at Morgan Stanley Dean Witter and leads the firm's global health care research team of 30 analysts. He previously tracked medical technology at Oppenheimer & Co., and was a health care analyst at Fidelity Management. He also worked at Bain & Co. as a management consultant concentrating on the health care industry.

Industry Outlook and Style

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Reicin divides his universe of 15 stocks into two broad groups -- one composed of slower-growing hospital-supply companies, which he calls Old World stocks, and the other made up of faster-growing medical-device companies termed, not surprisingly, New World stocks. Before picking the group's top performers for 2000, Reicin compared valuations with an S&P index that excludes the high-tech sector. "I felt the S&P general multiple was overstated, and by excluding technology, I was able to determine objectively what was and wasn't cheap in my universe," reasons the analyst.

On that basis, Reicin advised investors to play the device companies in the first half of 2000 and the supply companies in the second half. What he didn't anticipate, though, was that the stocks he liked -- Medtronic (MDT Quote), Guidant (GDT Quote), Novoste (NOVT Quote) and Cerus (CERS Quote) -- would meet his targets in the first two months of the year.

In a late-February report, "Old World Meets New World," Reicin shifted his focus to such lower-multiple names as Johnson & Johnson (JNJ Quote), C.R. Bard (BCR Quote), Baxter (BAX Quote) and Abbott Laboratories (ABT Quote). After they rose 45%, 24%, 17% and 27%, respectively, approaching fair value, Reicin again had to reconsider his strategy.

So now he's back where he started the year -- favoring the device companies. He has rerecommended Guidant and has boosted his rating on small-cap Aspect Medical Systems (ASPM Quote) to outperform.

According to Reicin -- who was commended by a voter in TheStreet.com Analyst Rankings -- Equity 2000 survey for his helpfulness and "great research" -- Guidant has more exposure than competitors to several new therapies that are emerging in the cardiovascular-device business. "Investors will start to have a greater appreciation for those new technologies and Guidant's participation in them over the next six months," he predicts.

As for Aspect -- an MSDW-led IPO that was priced at 15 in January, it shot up to 67 a month later and has since plunged to 20 -- Reicin is convinced that its new consciousness-monitoring technology for anesthesiologists will push the stock back up to the 40s over the next year. (Aspect is the only stock mentioned here with which Morgan Stanley Dean Witter has an investment banking relationship.) He does not subscribe to market fears of competitive inroads made by rival Physiometrix (PHYX Quote). "I'm somewhat dismissive of that company," he says.

Reicin urges investors to hold on to hospital-supply name Abbott Labs. He upgraded the stock to a strong buy in November, forecasting that revenue and earnings would accelerate dramatically in 2000, especially in the second half. For instance, he sees earnings-per-share growth moving from the 6% reported in the second quarter to 13% by the fourth quarter.

The industry as a whole should modestly outperform the market for the remainder of the year and into 2001, predicts Reicin. "But that will depend on the direction of earnings growth for the S&P as well as what happens in the pharma industry, which, in turn, is subject to political influences."

Stock Pick

Favorite stock for next 12 months:
Abbott Labs
Comment:
"Abbott's stock has moved up 16% year to date," Reicin observes. "Our year-end target for this $42 stock is $51. We think its performance will exceed the group's. The company is introducing several new drugs -- once-a-day Biaxin, Mobic for arthritis, Tricor for cholesterol and Flomax for prostate enlargement -- and we think that'll be the primary reason for its accelerating growth."


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Which stock do you like best? Weinstein and Malone: Baxter International Reicin: Abbott Labs