Roche: A pair of pairs

Genentech is bubbling over. Shares in the US biotech have risen more than 20% this week after Avastin, the group’s cancer drug, proved a success against some forms of lung cancer. But the market is now overly excited, and this opens up some attractive pair trades involving parent company Roche, Genentech and the biotech sector. Genentech currently trades at 50 times estimated 2005 earnings. This might appear justifiable given that the group expects to increase earnings by more than 25% this yea...