On Dec. 5, Standard & Poor's equity research group made a change to the S&P Top 10 portfolio -- those issues it considers to be the best candidates for capital gains over the next 6 to 12 months. Biotech outfit IDEC Pharmaceuticals (IDPH ) will replace homebuilder Hovnanian (HOV ).
S&P downgraded shares of Hovnanian to 3 STARS (hold) from 5 STARS (buy) to reflect a more conservative stance on homebuilders given an expectation for slightly higher mortgage rates in 2003, and a belief that a peak in the homebuilding cycle is near at hand.
Replacing Hovnanian is IDEC Pharmaceuticals, a leading developer of therapeutics for cancer and autoimmune diseases. Ranking among the select few profitable biotech companies, we at S&P see it posting earnings per share of 84 cents in 2002 and $1.16 in 2003. Based on a net present valuation of IDEC's products and pipeline, we feel the shares are worth $45 to $50. IDEC stock is ranked 5 S&P STARS (buy), along with the other names in the portfolio.
Here's the latest list:
S&P Top 10 Portfolio
For more information about the Top 10 portfolio, please visit http://www.businessweek.com/investor/content/jun2002/pi20020617_8998.htm
By Ken Shea and Robert Gold