Sunday, October 16, 2005

Bullish on Biotechs, Not Banks

With earnings due out in less than twenty four hours I am going to stick my neck out and say that the banks like Citigroup (C), JP Morgan (JPM), and Commerce Bank (CBH) will all disappoint next week. Just by going with history, Commerce has not missed the last five quarters compared to Citigroup which missed the last one, and JP Morgan which missed 2 out of the last 5. Keep in mind that estimates have been lowered for all the financials.

Now for the biotech stocks...
I believe that Gilead (GILD) will beat estimates and I am considering it for a trade. I also think Genzyme (GENZ) will beat estimates. Looking at the numbers, both of their estimates are too low in my opinion.

Other upside surprises or upward guidance might include General Dynamics (GD), Schlumberger (SLB), St. Jude Medical (SJT), Oakley (OO) (20% of float is short), Cerner (CERN) (35% of float is short), and J2 Global (JCOM) (17% of float is short).

I would not be surprised if Texas Instruments (TXN) missed.

Note: I am long C, SJT, & CERN
I have no short positions


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