Lehman Brothers downgraded the biotech sector to neutral from positive. CancerVax (CNVX) was one of the biotech stocks that fell on the comments.
Analyst Craig Parker says he thinks current valuations have discounted positive attributes of the biotechnology sector. As a result, he downgraded the sector. He notes the sector has achieved a level of financial maturity reflected in product sales of $30 billion-plus, an average operating margin for profitable companies of 34%, and sales growth of 20%-plus.
However, Parker believes that with increased reimbursement pressures, intensfied competition in most categories, and anticipated deceleration in sales growth in 2005, the sector could trade at a discount to historic levels for the next 12 months.