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Analyst Says 'Sell'; Genentech Shares Soar Instead on Study

May 20, 2003|From Bloomberg News

Investors who followed Michael King's advice on Genentech Inc. on Monday missed the stock's biggest rally ever.

King, a Banc of America Securities Inc. analyst, lowered his rating on the world's No. 2 biotechnology company to "sell" from "neutral" early in the day. In a note titled "It Kills Us to Do This," he cited concern that a study would fail to show that Genentech's Avastin drug helps prolong the lives of colon cancer patients.

In a news release after King's report, Genentech said just the opposite -- Avastin did extend patients' lives -- and the shares surged 45%.

King then reversed his call, raising the stock to "buy" in a midday report with the heading, "Holy Cow! Our Timing Couldn't Have Been Worse."

"He's got egg on his face," said Mort Cohen, who helps manage $200 million at Clarion Capital Corp. and sold 50,000 Genentech shares after the stock's big jump.

"Everyone is capable of making mistakes. He's made a mistake."

King couldn't be reached for comment.

Shares of Genentech, based in South San Francisco, jumped $16.95 to $54.85 on the New York Stock Exchange.

Analysts at 12 firms raised their rating on Genentech after the company's announcement.

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