23 Apr Midwest life science stocks sizzle in a tepid first quarter
The overall stock market performance for the first quarter of 2007 was not particularly exciting, although the ensuing three weeks represented a substantial improvement as the Dow Jones Industrials is poised to break through the 13,000 point barrier. So take the results, below, with a grain of salt.
The major life science indices ran in parallel with the market, with only the Amex Biotech Index showing some signs of life (if you call cardiac arrest “life”). With the exception of Midwest life science stocks, it was not a pretty or promising first quarter, but my how things change in three short weeks!
| Company/Ticker | First Quarter -2007 Stock Price | 2007 – Jan 1, 2007 Stock Price | % Change | Market Value $ Billions |
| Dow Jones Industrials | 12,354.35 | 12,459.54 | <1%> | N/A |
| NASDAQ National | 2421.64 | 2429.72 | 0% | N/A |
| NASDAQ Biotech Index | 776.95 | 802.82 | <3%> | N/A |
| Amex Biotech Index | 764.18 | 754.25 | +1% | N/A |
| Amex Drug Index | 342.01 | 345.06 | <1%> | N/A |
| 1. Procter & Gamble (PG) | $63.16 | $63.72 | <1%> | $199.3 |
| 2. Abbott Labs (ABT) | $55.80 | $48.83 | +14% | $86.1 |
| 3. Eli Lilly ( LLY) | $53.71 | $52.45 | +2% | $60.9 |
| 4. Medtronic (MDT) | $49.06 | $53.08 | <8%> | $56.5 |
| 5. 3M (MMM) | $76.43 | $77.53 | <1%> | $56.1 |
| 6. Walgreen’s (WAG) | $45.89 | $45.89 | 0% | $45.9 |
| 7. Dow Chemical (DOW) | $45.86 | $40.00 | +15% | $44.0 |
| 8. Baxter International (BAX) | $52.67 | $46.40 | +14% | $34.2 |
| 9. Monsanto (MON) | $54.96 | $52.00 | +6% | $29.9 |
| 10. Cardinal Health (CAH) | $72.95 | $64.18 | +14% | $29.2 |
| 11. Stryker (SYK) | $66.32 | $55.55 | +19% | $27.1 |
| 12. Archer Daniels Midland (ADM) | $36.70 | $32.28 | +12% | $24.0 |
| 13. Zimmer Holdings (ZMH) | $85.41 | $78.78 | +8% | $20.3 |
| 14. St. Jude Medical (STJ) | $37.61 | $37.97 | <1%> | $13.0 |
| 15. Biomet (BMET) | $42.49 | $41.45 | +3% | $10.4 |
| 16. Hospira (HSP) | $40.90 | $33.75 | +21% | $6.4 |
| 17. Sigma-Aldrich (SIAL) | $41.52 | $39.21 | +6% | $5.5 |
| 18. Abraxis Bioscience (ABBI) | $26.71 | $27.60 | <3%> | $4.4 |
| 19. Dade-Behring (DADE) | $43.85 | $39.76 | +10% | $3.6 |
| 20. Stericycle (SRCL) | $81.50 | $75.50 | +8% | $3.6 |
| 21. Techne (TECH) | $57.10 | $55.50 | +3% | $2.3 |
| 22. MGI Pharma (MOGN) | $22.47 | $18.38 | +22% | $1.8 |
| 23. Steris Corp.(STE) | $26.56 | $25.53 | +4% | $1.7 |
| 24. Perrigo (PRGO) | $17.66 | $17.40 | +1% | $1.6 |
| 25. AllScripts Healthcare Solutions(MDRX) | $26.81 | $27.03 | <1%> | $1.5 |
Source: Yahoo Financial: www.yahoo.com, April 2, 2007
Now if you had bet on the Midwest Large Cap Life Science stocks during this tepid first quarter, you would have done very well. In fact so well that 18 stocks (72 percent) out of our basket of the top 25 stocks showed better gains than the NASDAQ, making this one of the best first quarters for this group.
On the laggard side, not only were they few in number, but four of the six stocks in this group were equal to the Dow Jones and only slightly below the NASDAQ. Neither of the two remaining stocks showed the sharp declines of previous quarters.
A very healthy quarter! So what is driving it?
• Well, clearly the rage for bioethanol has had an umbrella effect on stocks like Archer Daniels Midland, a leader in this area.
• As overall corn and soybean prices have risen due to their use in biofuels, companies like Monsanto also continue to benefit from this halo effect.
• Our stock leader, MGI Pharma, has rebounded from last year due to the results of strong sales of its cancer palliative drug, which has now broadened its use into other areas to treat extreme nausea.
• Hospira, which made its first major company acquisitions since splitting off from parent company Abbott Labs, seems to be cooking on all burners.
• Even former parent Abbott seems to be likewise on steady throttle due to the outstanding results of its drug Humira, which gained approval in a new indication. Also benefiting Abbott are the news that it is spinning off a large chunk of cash for its base diagnostics business to GE Healthcare while retaining its specialty molecular diagnostics business, and its recent acquisition of cardiovascular company Kos Pharmaceuticals.
• Baxter has showed increasing financial strength as the effects of the new management team and resulting reorganization a few years ago is giving credence to its new direction and focus. This included the announcement in the quarter of the spin-off of the former Fenwal business.
• Cardinal Health also announced the sell off of non-strategic businesses, so it seems that the market is rewarding strategic focus.
But more importantly, there was widespread faith in our Midwest companies! Note that these stock results were in advance of releases of first quarter financial results and earnings.
Stock Price Leaders
Company–% Change
1. MGI Pharma, + 22 percent.
2. Hospira, + 21 percent.
3. Stryker, + 19 percent.
4. Dow Chemical, + 15 percent.
5. Abbot Labs, + 14 percent.
6. Baxter, + 14 percent.
7. Cardinal Health, + 14 percent.
8. Archer Daniels Midland, + 12 percent.
9. Dade-Behring, + 10 percent.
10. Zimmer, + 8 percent.
11.Stericycle, + 8 percent.
12. Monsanto, + 6 percent.
13. Sigma-Aldrich, + 6 percent.
14. Steris, + 4 percent.
15. Biomet, + 3 percent.
16. Techne, + 3 percent.
17. Eli Lilly, + 2 percent.
18. Perrigo, + 1 percent.
19. Walgreen, 0 percent.
Stock Price Laggards
Company–% Change
1. Medtronic, <8 percent>.
2. Abraxis Bioscience, <3 percent>.
3. Procter & Gamble, <1 percent>.
4. 3M, <1 percent>.
5. St. Jude Medical, <1 percent>.
6. AllScripts Healthcare Solutions, <1 percent>.
And remember that the market got even better after the first of April! Meantime, a round of applause for our Midwest Life Science stocks!
See you soon!
Previous articles by Michael Rosen
• Michael Rosen: A Midwest passage to India, Part II
• Michael Rosen: Indian trade possibilities boggle the mind
• Michael Rosen: A Midwest life-science odyssey comes full circle
• Michael Rosen: Bioscience clusters: Too many or room for more?
• Michael Rosen: The deconstruction of “Big Pharma”
This article previously appeared in MidwestBusiness.com, and was reprinted with its permission. It is not meant to be a recommendation to buy or sell stocks!
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.
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