Citi analyst Yaron Werber initiates on Genentech (DNA) with a Buy and a $91 target. Werber sees DNA yielding a 14.8% return and is upbeat about growth opportunities given the strength of Genentech’s flagship drug Avestin:
Q2 results showed Avastin reaccelerating due to growth in breast cancer. This is likely sustainable as our oncology survey indicates that penetration in 1st-line breast cancer could grow by 28% in 12 months, while RIBBON-2 data in ’09 could double the penetration in 2nd-line.
Werber also thinks that Avastin will likely be approved for use in colorectal cancer:
Our analysis suggests that Avastin has a 60% chance of showing success in the NSABP C-08 study (data late ’09) based on clean safety, good compliance, and slightly more chemo use in Avastin’s arm.
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