Wednesday, April 12, 2006

Good Earnings From Genentech

Genentech reported very good numbers yesterday, but the stock sold off a bit today. I couldn’t see anything wrong with the earnings report. The company reported EPS of $0.46, which beat the consensus estimate of $0.41 and revenues increased 36% year over year. The company raised guidance for the year to 45-55% EPS growth. Genentech’s currently trading at ~43X this years earnings and ~32X next years earnings. Its long term growth rate for the next couple of years is 30%+ growth. In another words, Genentech is pretty cheap right now. If the stock declines further, I’ll back up the truck. I almost never buy a stock that’s declining, but I have a strong conviction in Genentech. You sometimes have to go against the crowd to make some $$$.


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