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Pesek also likes Cambridge, Mass.-based Genzyme (GENZ), a biotech outfit focused on diseases stemming from enzyme disorders. "Its small nichey markets provide an opportunity to raise prices," Pesek says, noting that many of its pipeline products -- such as Myozyme, for treating often-fatal Pompe disease, which can affect muscles and the heart, and Mozibil, used to increase stem-cell counts in transplants -- benefit from orphan-drug status. Campath, for multiple sclerosis, differs because it has a potentially enormous market. The National MS Society estimates that about 200 Americans are diagnosed with this auto-immune disease every week. Overall, there are about 400,000 people in the U.S. and more than 2.5 million people worldwide suffering from MS. "Management believes they can achieve a compound annual growth rate in earnings per share of 20% from 2007-2010, and if pipeline products are successful that will be even better," Pesek says. He added to his Genzyme stake in the summer of 2007 when the stock was trading in the low to mid-60s. More recently, it's been trading at 70.20. The consensus estimate for Genzyme's EPS is $3.97 in '08, $4.73 in '09 and $5.55 in '10. Its price-to-earnings multiple works out to about 15 times '09 estimates.

The derivatives are more powerful than the stocks they encompass -- Nasdaq or S&P futures -- but they are not more powerful than the companies themselves. Genzyme (GENZ), Gilead (GILD), Hologic (HOLX), Starbucks (SBUX), they will all get killed. Is that right? I don't think so.

BofA initiated Genzyme (GENZ) as a Buy with $90 price target, PEG of 1.1 and 2009 EPS of $4.68 based on a 3-year CAGR of 17%.

products and therapies relating to renal, therapeutics, transplants, biosurgery, and genetics

check out Genzyme (GENZ) and Isis (ISIS) for their diabetes and cholesterol franchises.

Biotech medical player

Great future

Earnings Stability Rating: 3. Biotech large cap’s industry group is one of the best-performing over the past six months. Five-year earnings growth rate: 27%.

made money

Lost many dollars

out classed by competition