On Amicus, Briefly

Zacks senior biotechnology analyst Grant Zeng, CFA has effected a downward revision to the price target from his earlier position but maintained his Hold rating to Amicus Therapeutics, Inc. (FOLD). We excerpted the following details:

'Amicus Therapeutics is developing small, oral molecule drug candidates for rare genetic diseases using its pharmacological chaperone technology. There are three lead candidates: Amigal in phase II for Fabry disease, Plicera in phase II for Gaucher disease, and AT2220 in phase I for Pompe disease.

'Although we are optimistic about the prospects of the three candidates and pleased to see the alliance with Shire PLC (SHPGY), all three candidates are in early or middle stage of development. We are also concerned about the competition in each of the disease area.

'We are optimistic with Amicus pharmacological chaperone technology and its three lead candidates accordingly. Amigal, Plicera and AT2220 target the rare genetic Fabry disease, Gaucher disease and Pompe disease respectively. We believe Amicus's small drugs have advantages over existing therapies in each of the above disease area. We are also impressed by the deal with Shire for the company's three lead programs.

'Unfortunately, all three of Amicus' candidates are still in early or middle stage of development and they will face substantial competition from big pharmaceutical or biotech companies if approved. We arrive at our price target of $12.50 by applying biotech industry average P/S ratio of 10 x, multiplied by our estimated 2009 revenue of $40 million, divided by 26.5 million shares outstanding at that time and discounted at 25% for one year. Therefore, we maintain our Hold rating and our price target is $12.50.' 

Strength Shown at Norfolk Southern

Maintaining her optimistic views regarding rail transport company Norfolk Southern Corporation (NSC), Zacks senior logistics analyst Ann H. Heffron, CFA explains why the shares are worth investing on and the future looks bright for the company:

'Norfolk Southern Corporation reported fourth quarter EPS of $1.02, much better than the $0.90 consensus and our $0.95 estimate on a better-than-expected revenue gain. Revenues rose 6 per cent, partly due to a $26 million contract settlement, offset by a 3 per cent volume reduction on drops in three of seven sectors, reflecting weakness in housing, coal, and inter-modal. Positively, pricing held up with the revenue yield up 9%, and costs were well controlled.

'We are maintaining our 2008 diluted EPS estimate at $4.05. NSC just increased the dividend 12% to a $1.16 annual rate and has increased the dividend at a 41% compound rate over the last two years. We are maintaining our 2008 diluted EPS estimate at $4.05. At its current price, NSC shares are trading at significant discounts to the industry median P/E ratios for 2008 and 2009. We do not believe the market is giving credit to NSC's many strengths, including above-average profitability, operating margin, and dividend yield.

'Assuming moderate P/E expansion and a PEG (P/E divided by estimated future growth) ratio roughly in-line with the industry's 1.1X, we get a target price of $59, based on about 14 ½X our estimated 2008 diluted earnings of $4.05 per share. NSC is the cheapest stock in the rail industry, valued on price/earnings.'

Good Q4 for Hold-Rated BAX

Zacks senior medical technology industry analyst Gregory Aurand, CFA had this to say recently in his latest report on large-cap medical devices company Baxter International (BAX):

'The company's fourth quarter results beat our estimates on higher revenues and better operating improvement. Despite strong comparisons in early 2008, management expects 8% revenue growth and EPS growth of 11-14% this year. Guidance assumes mid-2008 U.S. reentry of COLLEAGUE and 27% growth in vaccines.

'We are increasing our estimates to reflect stronger product sales, reentry of COLLEAGUE and continued operating improvement. Our 2008 EPS estimate is above management's $3.10-$3.18 guided range.