Hold Genomic Health

The following excerpts explain why Zacks senior healthcare industry analyst Grant Zeng, CFA maintains his Hold rating which he had issued some time ago to Genomic Health, Inc. (GHDX), the biotech company:

'Genomic Health Inc. is an oncology-based biotech company focused on the development and commercialization of genomic-based clinical diagnostic tests for cancer that allow physicians and patients to make individualized treatment decisions. We remain optimistic of the growth of the company's lead product, Oncotype DX, which is used for early stage breast cancer patients to predict the likelihood of cancer recurrence. However, we remain concerned about the company's weak pipeline.

'We are optimistic about the growth of Oncotype. Clinical studies have validated the use of Oncotype for breast cancer patients. In recent months, Oncotype met the criteria set by Blue Cross and Blue Shield Association Technology Evaluation Center for women with breast cancer and its use in breast cancer treatment selection was recommended by the ASCO. The recent positive developments validate the clinical utility of the assay and coupled with the company's continuing marketing efforts, will help increase the awareness of Oncotype among patients, physicians and payers.

'However, longer-term, the lack of a pipeline product in late-stage clinical development remains a major concern. The company relies heavily on Oncotype DX for both short- and long-term growth. We would like to gain more visibility on how Genomic Health diversifies its product offerings and how it expands internationally before we become bullish on the shares.

'We maintain our Hold rating on Genomic Health's shares with a target price of $24.00. We believe the company's shares are fairly valued at the current level. We arrive at our target price by using a P/S multiple of 7.8x our 2010 sales figure of $191.25 million, discounted back at 25 per cent for three years.' 

VLCM in a Good Niche

Reiterating his bullish case for Volcom, Inc. (VLCM), Zacks senior consumer products analyst Steven Ralston, CFA explains why the future looks bright for the apparel and shoe company and investors should add the name to their portfolio:

'Volcom, Inc. has an impressive sales growth record. Continued distribution channel expansion, both domestically and internationally, along with a strong new-product effort should support Volcom s 36% sales growth rate. Management's decision to bring the European franchise in-house has had positive results. In the first quarter of operation, the European business generated strong revenues.

'In addition, in the third quarter of 2007, the company reported revenues at the top end of expectations and a $0.03 positive earnings surprise. The stock's weakness due to lower sales to Pacific Sunwear (PSUN) is providing a buying opportunity.