Zacks Analyst Blog Highlights: Xoma, Genentech, Schering-Plough, LabCorp and Quest Diagnostics.

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Xoma, Inc. (Nasdaq: XOMA), Genentech (NYSE: DNA), Schering-Plough (NYSE: SGP), LabCorp (NYSE: LH) and Quest Diagnostics (NYSE: DGX).

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Wednesday's Analyst Blog:

Momentum at XOMA

Xoma, Inc. (Nasdaq: XOMA) is picking up momentum in early 2007, with three positive developments in the last week. On January 9, 2007 the company initiated a phase I/II trial with Neuprex on allogenic stem cell transplant patients. Xoma remains committed to bringing Neuprex to the market in the U.S. through a combination of in-house and investigator sponsored trials (ISTs). Safety and pharmacokinestic data collected from this phase I/II trial in HSCT should help management plan additional trials potentially in the radiation protection under the U.S. government's biodefense efforts.

On January 10, 2007, Genentech (NYSE: DNA) reported sales of both Raptiva and Lucentis above expectations. Genentech pays a royalty to Xoma on sales of both drugs. We have revised our earnings model based on the stronger-than-expected sales of Raptiva and Lucentis.

Most recently, on January 17, 2007, Xoma signed a second collaboration with development partner Schering-Plough (NYSE: SGP), resulting in an upfront milestone payment. Xoma has not disclosed the upfront milestone fees captured from this collaboration, just that the total deal before back-end royalties on product sales is between $25 and $75 million. Using its extensive collection of phage display libraries and optimization technologies, Xoma will discover therapeutic antibodies against one or more targets selected by Schering-Plough. Xoma may also utilize its proprietary Human Engineering technology to humanize antibody candidates generated by hybridoma techniques. During the fourth quarter of 2006, both parties continued with pre-clinical studies. We expect an announcement of the first target to be made soon.

Slow LabCorp Ramp-Up

The UNH contract could produce volatility for LabCorp (NYSE: LH), given the possible slower-than-expected ramp-up. Stock buybacks remain a focal point for cash use and our estimates go up on an increased buyback outlook. At 18x our increased 2007 $3.91 EPS estimate, a premium to Quest Diagnostics' (NYSE: DGX) 1.3x 2007 P/E/G, our target moves to $70.00.

With the integration of Dynacare and Dianon complete, the company now expects to benefit through cost savings. LabCorp expects these acquisitions to result in a cost savings of about $30 million on a pre-tax basis by mid 2007. The company outlined (as part of a strategic plan) to restructure LH sites over the next two years based on the Dianon model. Management believes that Dianon, a leader in anatomical pathology testing, is more efficiently run and provides better customer service.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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