woes Friday are giving people an excuse to look elsewhere for growth opportunities or safe havens, such as drug and biotech stocks.
As shares in the giant chipmaker slumped 21% after Thursday's warning, stocks like
Human Genome Sciences
said Thursday that third-quarter revenue and profit margins would be lower than expected, due to lackluster demand in Europe.
"Intel gave people an excuse to get into these things," says C.J. Sylvester, drug analyst with
, noting a rally in drug, biotech and other health care stocks. He said health-related stocks were trading at market multiples earlier in the week, making them relatively cheap by tech-stock standards.
Millennium shares rose $17, or 13%, to $147.50; Human Genome gained $15, or 9.7%, to $169.19. Sepracor rose $9, or 8.8%, to $111, while Incyte rose $3.50, or 9.5%, to $40.06. Major drug stocks also rallied, led by
, which gained $3.19, or 5.9%, to $59.31.
Even as patent worries afflict major drugmakers, the profit forecast is relatively sound over the medium term, making stocks like
something of a safe haven. But no one is expecting a smooth ride for the stocks in the next two months, when Democratic and Republican candidates will routinely line up to bash one of the most profitable and essential industries.
"Election-year rhetoric could turn the fourth quarter into a bumpy ride for pharmaceutical investors," says Jim Kelly, a
Credit Suisse First Boston
drug analyst in a note to investors. "The prescription drug issue will be a political lifeboat for candidates from both parties."
While election-year posturing could drive some investors away from the sector, others could be brought in by positive product news emanating from a raft of fall medical and investor conferences, CSFB says.