Genzyne Corp.'s (NASDAQ: GENZ) stock has meandered since the June 19, 2009, Buy recommendation at $55.02, and it appears institutional investors have adopted a wait-and-see stance regarding the company.
Even so, I'm reiterating my Buy rating for GENZ. Here's why:
Genzyme has already announced that the Allston plant closure will subtract $400 million from FY2009 revenue, which will result in essentially flat revenue for the year. From there, revenue should increase at least 10-15% in FY2010, aided by increased sales of Myozyme, and on prospects for Renvela and Synvisc-One, and on other pipeline drugs. The First Call FY2009/FY2010 EPS estimates for GENZ are $2.46 to $3.96.
Technically, Genzyme's stock chart has good support at/near $53. The stock did violate both the psychologically-significant $50 level and break below the 50-day moving average in August, but it rallied comfortably out of each within weeks. Only a sustained drop below $40 could refute the bullish trend, and the view from here is ... that's not likely to occur.
Stock Analysis: Genzyme Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in GENZ now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your GENZ position before December 2009. Sell/stop loss if you were to buy shares in this company: $37.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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