ASCO Has Biotechs Riding High

Last week, CIBC World Markets downgraded Genentech, saying its stock price has run up too much. On Monday, RW Baird cut the stock to neutral from outperform, but did raise its price target to $60 from $50.

UBS PaineWebber took a different approach, raising its price target on Genentech to $100 from $75.

On Street Insight, a sister site to TheStreet.com, contributors were considering the effects of the ASCO meeting and the current environment for biotech stocks.

Jim Gulbrandsen, the managing partner and founder of Silvertree Management Group and general partner of Silvertree Equity Partners I, a hedge fund based outside San Francisco, wrote that "'too far too fast' is definitely in my mind as it relates to biotech."

He also wrote that "there could be some digestion in coming days, but I contend that we are in the top of the 4th inning. The momentum crowd has been jumping all over the group, but for the first time in years I believe the mutual funds will have to pay attention to biotech. Whether they should go higher or not, they will. Volatility will set in very soon, but I will be buying significant selloffs, including the predictable ASCO selloff (too predictable?)."

Sally Yanchus, an analyst and consultant for health care clients, and also a contributor to Street Insight, wrote that she was "less inclined to believe that the biotech group will experience a harsh selloff post-ASCO" for two reasons.

"The FDA's new position on the drug-approval process will result in an acceleration in approval times, which is arguably the single biggest fundamental positive for pharma and biotech companies," she wrote.