With the 10-year Treasury bond rates playing tug-of-war with investors in the stock market, analyst coverage can still spark growth in companies. Yesterday’s 10-year note reached a 5-year high, peaking at 5.27 percent, guiding a stock market sell-off yesterday. Many investors feared the higher rates would increase borrowing cost and slow down the market.Rodman and Renshaw, a New York-based investment bank, was able to side track investors minds with a recent “Market Outperform” rating of Generix Biotechnology Corp. (NASDAQ: GNBT). Analyst Navdeep Jaikaria said the stock should reach a target price of $6 over the next 18 months.
According to the report, analysts anticipate that Generix’s oral insulin, Oral-lyn, could be a big-time player in the non-injectable insulin market. They estimate that this product could result in revenues in the upward of $660 million for Generix by the year 2013. Oral-lyn delivers insulin to the oral mucosa, avoiding the potential risks of chronic lung tissue exposure in injectable insulin. Oral-lyn is also able to react with the body and provide insulin within 30 minutes, which is twice as fast as injected insulin.
The positive rating was able to send Generix’s stock soaring yesterday as it reached a three-month high of $1.80, up 54 cents or 43 percent. This upward trend continued today as a positive reaction to the news from Rodman and Renshaw. Currently the stock is up 19 cents, or 11 percent, to $1.99.
Other economic factors could be in play with the outperform rating as the 10-year note retreated today at a rate of 5.22 percent. Coinciding with recent strength in the consumer spending reports, investors were eager to get back into the market surrounding its new strength with today’s news. Retail sales for the month of May were up 1.4 percent, along with an increase of auto and building materials of 1.8 percent and 2.1 percent, respectively.
Hopefully the conditions in the market will continue to drive the economy forward even with the pressures that the fed might increase rates. Forward movement in the market may help create a bigger market for Generix within diabetics. Jaikaria predicts that the growing worldwide market could expand to $12 billion by the year 2010.