Time to sell Placer Dome Inc (page 1 of 2)

US equities

After a 32% increase in share price since our recommendation on March 17, we did recommend to sell the gold mining stock Placer Dome Inc (PDG, $12.15, CSFB: Outperform).

We remain positive on gold and we are looking to buy back Placer Dome at lower levels. Our 12-month target price of $17, based on our $425/450 price target for gold. Our rating on Newmont Mining (NEM, $33.60, CSFB: Neutral) remains unchanged with a buy, as the stock offers a good proxy for gold, thanks to its sensitivity to the gold price.

We did also take partial profits in Qualcomm Inc. (QCOM, $36.45, CSFB: Neutral), as the stock did hit our short-term trading target of $38 intraday, yielding a 14% profit. However, still looking for a $42 12-months price target for the stock.

We are increasingly comfortable with our view on Qualcomm. As the reason for the rally in the stock last week was an announcement by one of its major customers China Unicom, that it will extend its prepaid phone card services for its CDMA telephony services, after it has completed a successful trial.

In a first phase it will offer the service to Beijing, and later expand the service nationwide. China Unicom is short of its full year target for new CDMA subscriber and is aggressively marketing this service, which is based on Qualcomm technology. Qualcomm share price has suffered from the slow subscriber growth of China Unicom, but this could change, if the aggressive marketing campaign bears fruit.

It could not only improve sentiment towards Qualcomm, but would also mean that the analyst estimates for Qualcomm's revenue growth could prove too conservative at this point and would have to be revised upwards. We reiterate our buy recommendation on Qualcomm and would accumulate on weakness at levels around $35.50.

Drug maker Pfizer Inc. (PFE, $35.57, CSFB: Outperform) and Aventis SA (AVE_FP, EUR51.60, CSFB: Outperform) inhaled insulin, Exubera, shows efficacy in the treatment of Type 2 diabetes, according to a phase 3 results on the drug, conducted by their developing partner Nektar Therapeutics.

Pfizer and Aventis expect to grab a significant market share in the diabetes market, which grows by 16% a year and makes up for approximately 10% of health-care spending in the US, with replacing the current treatment with painful shots, by an easy to use inhaled version of insulin.

Pfizer will be filing for FDA approval, to be ahead of a similar product in development by Aradigm Corp. and Novo Nordisk A/S. The drug could be on the US market by late 2004, early 2005, after having been delayed for risk of pulmonary fibrosis, a problem that has been solved.

The company also said that next year's earnings and sales would exceed analyst's estimates. Pfizer's CFO forecasts a fiscal 2004 EPS of about $2.13, compared to an average analyst estimate of $2.06 a share.

Last Tuesday the stock traded as close as 8 cents away from our 12 months price target of $37 and rose 18.6% since our recommendation on January 22nd. In order to protect our profits, we are raising our stop-loss limit to $33 form the previous $27. We would like to advise investors holding the stock to consider partially locking in profit.

Finally we have posted a new Investment idea on Johnson & Johnson (JNJ, $54.45, CSFB: Not rated) as a core holding, in order to reinvest the profits from the above recommendations.

We believe Johnson & Johnson offers attractive valuation/growth prospects, as the healthcare and medical technology sector offer defensive growth potential.