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Salomon Initiates Coverage of 5 Genomics Companies

NEW YORK, Sept 26 – Salomon Smith Barney issued new recommendations for five genomics companies on Tuesday as part of the investment bank’s efforts to expand its coverage of the sector.

In a report analyst Meirav Chovav issued a Venture, Neutral (V3) rating for Affymetrix (Nasdaq: AFFX), an Outperform, High Risk (2H) rating for Applied Biosystems (NYSE: PEB), a Venture, Buy (V1) rating for Incyte Genomics (Nasdaq: INCY), a Venture, Outperform (V2) rating for Celera Genomics (NYSE: CRA), and a V2 rating for Millennium Pharmaceuticals (Nasdaq: MLNM).

Chovav said her Venture, Neutral rating for Affymetrix was based on the growing number of competitors in the DNA microarray sector as well as a number of “potentially risky” patent disputes. She issued a 12-month price target of 67 for the share. Affymetrix was recently trading down 8 5/16, or 12.7 percent, at 57 1/4.

Meanwhile, Chovav said Applied Biosystems was in a good position to capitalize on the growth in the genomics sector.

“Armed with a strong management team, a broad and deep technology platform, few formidable competitors, and robust growth trends, we believe Applied Biosystems is well-positioned to capitalize on the genomics revolution,” Chovav wrote.

She forecast 20 percent top- and bottom-line earnings growth for the company in the next three to five years. She issued a 12-month price target of 135. The company’s share price was off 5 3/4, or 4.8 percent, at 114 in afternoon trading.

Noting Incyte Genomics’ edge as the leading provider of genomic information, Chovav said that the company had built barriers to entry that had reduced the competitive threat to its database business. She forecast that the company would become profitable in 2002, following a period of increased investment in research and development. She set a 12-month price target of 54. In afternoon trading Incyte’s shares were up 1/8, or .33 percent, at 38 1/4.

Chovav issued a Venture, Outperform rating for both Celera and Millennium. Saying that Celera had substantial resources and significant commercial potential, Chovav issued a 12-month price target of 114. Celera was down 3 3/4, or 3.6 percent, at 99 5/16 in the afternoon.

As for Millennium, Chovav said the company was well-poised to become a drug development company. She issued a 12-month price target of 155. The company’s stock was off 9 11/16, or 6.3 percent, at 143 7/8.

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