Chances to Shine
Larsen Kusick
The annual JPMorgan Healthcare Conference is in full swing this week, and One-rated model portfolio name Alnylam Pharmaceuticals (ALNY:Nasdaq) will be presenting on Wednesday morning at 8:30 EST. We don't expect management to provide any major news, but we do believe the company will reiterate its solid financial position, offer insight into its latest deals (including the new agreement with Cubist Pharmaceuticals (CBST:Nasdaq), which was announced on Friday), and talk about its progress in the preclinical development of RNAi-based products. With RNAi in its early stages of recognition by the Street, it's important for the company to promote both the short-term financial side of its business as well as the long-term potential that RNAi presents for developing the next generation of treatments for innumerable human conditions. Most analysts and investors remain unconvinced about the potential for RNAi to ever generate commercial products, but we view this doubt as a positive for investors based on the potential upside as progress is made in resolving problems at the delivery stage.
In the meantime, large pharmaceutical companies are desperate for new sources of growth as existing drugs are coming off patent over the next few years. The biotech industry is one of the few places that offers any hope for reinvigorating large-cap pharmaceutical pipelines, and we believe this situation creates an attractive risk-reward profile for Alnylam investors. Readers can listen to a Webcast of management's presentation at the JPMorgan Conference by going to Alnylam's Web site.
An article in the Marketplace section of today's Wall Street Journal focuses on the positive developments that have occurred in the alternative energy sector since President-elect Obama's November victory. In particular, small companies involved in clean technology and energy efficiency are seeing increased interest from firms that expect the U.S. government to step up its efforts to promote alternative energy infrastructure. Small solar companies are seeing major interest from venture capitalists. Indeed, the alternative energy sector is one of the few areas seeing continued interest in the wake of the deteriorating economic environment.
In the model portfolio, we continue to view Energy Conversion Devices (ENER:Nasdaq) as the best solar play for investors in a tough market. Aggressive investors should consider building positions at the current level. Low crude oil prices and tight credit markets are negatives for all solar companies, but today's Wall Street Journal article shows how companies are ready to spend on solar panels and other green-technology in anticipation of new governmental policies.
Meanwhile, Wall Street analysts have been cutting earnings estimates for months and downgrading solar companies based on lower oil prices and expectations for lower pricing on panels. It takes considerable faith to buy stocks in the face of these headwinds, but this negativity could be setting the stage for a large rebound as economic conditions improve. We continue to believe Energy Conversion Devices is in an excellent position to grow sales in the U.S.
