has received increased support from the analyst community over the past week.

First, Goldman Sachs upgraded the shares May 31, from neutral to buy. Merrill Lynch followed that up by adding the company this week to its U.S. list of top stocks to buy, citing an $86 sum-of-the parts price target.

Still, Genzyme closed Tuesday at $65.76, up just 5.8% for the year. At current levels, the stock is valued at just 20.17 times expected 2007 earnings of $3.26 a share.

That values Genzyme, which is on track to deliver 15%-plus annual earnings growth for the fourth straight year, near the midpoint of its peers. On the other hand, it's the lowest valuation the company has received in nearly five years.

With that in mind, I'm here to answer readers' questions: Should you buy it? Is the renewed brokerage interest in Genzyme a sign that the stock is about to outperform the market once again?

Genzyme is best known for making drugs that treat rare genetic disorders. The company's top-selling product is Cerezyme, which treats Gaucher disease, a problem that causes excess fat to build up around a person's organs. Another major driven is Renagel, which controls phosphorus levels is dialysis patients.

It's likely these products will be joined by many others in the coming quarters, as the company currently has 10 products in phase III trials and is expecting to receive Food and Drug Administration approval for another dialysis drug, Renvela, in the second half of 2007.

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Genzyme also announced May 29 that it would acquire Bioenvision for $345 million in cash, a firm that the company has partnered with to launch clofarabine, a drug for children's leukemia, in Europe.

The purchase would give Genzyme exclusive rights to the leukemia product as well as access to the company's other experimental drugs. Bioenvision's largest shareholder has opposed the deal, but I believe that Genzyme should be able to close the acquisition without having to materially raise its bid.

Management also said last week it's authorized the repurchase of $1.5 billion (23 million shares) of stock over the next three years. The company has $724 million ($2.75 a share) of net cash on the balance sheet and plans to execute the buyback with internally generated operating cash flow, which totaled $952 million over the past four quarters.

With that in mind, I do believe that readers should consider Genzyme at current levels. Management said at last month's investor meeting that it's targeting 15% annual sales growth over the next five years, from its existing products alone

When you add in the company's attractive late-stage pipeline and sizable buyback program, I believe that Genzyme deserves to trade at a premium to its peers and could reach $80 over the coming quarters.

David Peltier is a research associate at In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback;

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