Investors began bailing out of Genentech Inc. (DNA) on Wednesday after the world's second-biggest biotechnology company delivered fourth-quarter earnings that lacked their usual glitter.

Its shares fell as much as 6.7 percent as some analysts questioned the company's ability to sustain its seemingly unstoppable earnings momentum.

"Genentech is a company that has enjoyed an embarrassment of riches over the past two-plus years," said Michael King, an analyst at Rodman & Renshaw, who cut his rating on the stock to "market perform."

"However, the investment necessary to support its pipeline appears to now be sapping earnings growth."

Genentech's shares soared 70 percent last year, outperforming those of its peer group, as the company reported one piece of good news after another on the effectiveness of its drugs.

On Tuesday, after the market closed, it said fourth-quarter profit rose 64 percent. But sales of its colon cancer drug Avastin fell short of expectations.

Investors had hoped more doctors would prescribe Avastin for lung and breast cancer, something they are allowed to do even though the drug has not yet been approved for those uses.

"Avastin is a key driver for future growth and needs to beat estimates at this point in its launch in order to justify the current valuation," said Eric Ende, an analyst at Merrill Lynch, who cut his rating on Genentech to "neutral."

Genentech's stock is trading at a multiple of 52 times expected 2006 earnings. That compares with multiples of 21 for rival Amgen Inc. (AMGN) and 24 for Biogen Inc. (BIIB).

On a conference call with investors, Genentech's commentary on Avastin was not entirely reassuring, said Eric Schmidt, an analyst at SG Cowen, who has a "neutral" rating on the stock.

"They admitted there was a variety of factors in 2006, including reimbursement, that could impact sales," he said.

But Susan Desmond-Hellmann, Genentech's president of product development, struck an upbeat note, saying in an interview that the company may increase its 2010 financial targets because of its recent successes.

"We didn't know there would be so much upside surprise in 2005 when we set the 2010 targets," she said.

Schmidt said estimates for potential sales of Avastin by 2010 range from $4 billion to $8 billion, assuming it wins approval to be used in other cancers.

"If the company can achieve the higher end of that range, the stock could continue to work," he said.

Jason Kantor, an analyst at RBC Capital Markets, said Genentech's relatively high multiple was justified.

"We believe continued strong oncology sales and operational execution will sustain the premium multiple versus the peer group through 2006 and beyond," he said.

Ronald Renaud of JP Morgan said that while appearing expensive on a near-term basis versus its peers, "we think Genentech is poised to deliver impressive growth for the foreseeable future."

Shares of Genentech rose 70 percent in 2005 and are up nearly five-fold since 2003. The American Stock Exchange biotech index gained 25 percent in 2005 and has nearly doubled since 2003.

Genentech's shares were down 4.3 percent to $89.30 in afternoon trading on the New York Stock Exchange after falling as low as $87.10 earlier in the day.