Joseph Parnes, editor of Shortex , recommends buying shares of San Diego-based Amylin Pharmaceuticals . The biopharmaceutical outfit develops and commercializes drugs to treat diabetes, obesity and cardiovascular diseases.
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Amylin shares are up 120% over the past year and up 21% year-to-date, closing Tuesday at $48.13. The company has a market capitalization of just under $6 billion and brought in $290 million in revenues over the past 12 months. Because it still has many of its drugs in development and early commercialization stages, it lost $251 million on the bottom line over the same period of time.
Parnes is encouraged by some of the company's recent product momentum. The U.S. Food and Drug Administration approved Byetta (exenatide) and Symlin (pramlintide acetate) in the spring of 2005, and both injectable drugs are beginning to bring in revenue.
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"The demand for Byetta, the type 2 diabetes drug co-marketed with Eli Lilly, is exceeding supply," says Parnes. "Second quarter sales of Byetta were $98.6 million, beating the consensus estimate of $85 million. The dramatic acceleration in demand represents a further upside in lieu of fading supply problems. The company's anti-hypoglycemic drug, Symlin, used in diabetic patients treated with insulin, is expected to pick up as well," adds Parnes.
Wall Street analysts are overall neutral to slightly bullish on Amylin. Last week, two analysts downgraded the stock to "market perform" and "equal-weight," although another analyst reaffirmed his overweight rating.
Parnes, who recommends both long and short stock positions in his newsletter, advises buying Amylin between $48-$50 and sees the stock's near term price rising to $58-$60. Longer term, he sees the stock trading between $65 and $67.
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