Why AstraZeneca May Perk Up Again

Most drugmakers giving presentations at the American Society of Clinical Oncology's June meeting -- including Genentech -- saw their stocks jump. Yet AstraZeneca (AZN ), Europe's No. 2 drugmaker, got scant attention, despite favorable reports on its cancer drugs, including Iressa, which got a Food & Drug Administration O.K. on May 5 and was launched in late May. Iressa is a "last-resort" treatment for lung cancer -- designed to shrink tumors without the harsh effects of chemotherapy.

AstraZeneca zoomed from 41 to 48 on the Iressa news but soon eased to 41. But Bernie Schaeffer of Schaeffer's Investment Research is bullish. The stock has stayed above its 20-month average of 40, he says, and could move up 30% this year. He sees heavy short-selling as a plus: Shorts will have to cover when improved results roll in. "With Iressa, Astra should meet the higher end of earnings estimates," he says. Schaeffer expects AstraZeneca to launch cholesterol-reducer Crestor and stroke-preventive Exanta in 18 months.

Catherine Arnold of Sanford C. Bernstein sees 2004 earnings of $2.26 a share (above consensus) -- based on her outlook for Crestor and on expanded margins. Her 2003 estimate is $1.66. Arnold's 12-month price target: 48.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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