Ahead of the Bell: Biotechnology companies

In starting coverage of the sector, Mark Schoenebaum said shares of Amgen and Gilead should both rise almost 18 percent over the next year. He thinks shares of Biogen Idec Inc. and Genzyme Corp. will trade close to their current prices.

The analyst said sales of Gilead's HIV drugs, which include Atripla, Emtriva, Viread and Truvada, should meet or beat Wall Street expectations and the stock should keep rising. He expects sales of Amgen's anemia drug Aranesp to weaken further, but said positive clinical trial results for company's cancer antibody denosumab could lift the stock.

He said Genentech shares could jump as much as 40 percent if clinical trials show its drug Avastin is effective as part of a treatment regimen for colon cancer. The stock's rewards outweigh the risk of a trial failure, he said.

Schoenebaum's target price of $83 per share implies the stock will gain 11.6 percent. He does not expect complete results from the Avastin colon cancer trial until 2009. He said the drug's sales in lung and breast cancer are also significant issues.

The analyst said he sees few events that will lift Genzyme shares. He is not sure the company will reach its profit and revenue goals, or its sales targets for drugs used in treating cancer, kidney disease and cellular diseases, and in biosurgery.

He wrote that risks and rewards for Biogen shares are fairly balanced: its multiple sclerosis and Crohn's disease drug Tysabri may face difficult competition and the pipeline may not offer much growth, but eventually the company could be a buyout target.