Elan's stock gained 1.5 per cent on the Dublin exchange yesterday after the company was admitted to a key index of European shares.
Shares in the pharmaceutical company rose to €64.50 (£51) from €59.50 when it was listed for the first time on the Morgan Stanley Capital International (MSCI) Europe Index. Elan also entered the MSCI Ireland index.
It traded 6.3 per cent stronger early yesterday in Dublin. At lunchtime in New York, the company was trading 3.56 per cent stronger at $50.78.
Iona Technologies, the only other company added to the national index, gained 8.44 per cent to close €6.50 stronger at €83.50 in Dublin.
Tullow Oil, Fyffes and Irish Continental Group were deleted from this index yesterday.
Elan's entry to the Europe Index is significant, according to analysts.
Mr Robert Perryman at Merrion Stockbrokers said the change would prompt fund managers who follow the index to automatically include it in their portfolios.
"It will certainly increase Elan's profile in Europe," he said.
"You would call it a short-term positive technical situation."
Mr Perryman said a short-term delay in final Federal Drug Authority approval of three new products - Neurobloc, ziconotide and frovatriptan - was causing temporary share price weakness.
"These products will be key drivers of Elan's earnings growth in the next three years. There isn't a high risk they will be rejected."
The company's medium-term growth prospects remained intact, he said.
In a statement, MSCI said the company was not previously included on the index because its shares had "relatively low" liquidity in Europe and were mainly traded in the US.
"This situation has now changed, as the liquidity of Elan shares in Europe has improved in Europe." The stock has out-performed the ISEQ index by 15 per cent since May and now makes up about 25 per cent of the index. In January, it traded at €26.35 in Dublin.
Its main listing is in New York, where it traded about $30 in January.
Its $1.8 billion (€2.11 billion) acquisition last September of a San Diego-based drug firm Dura is seen as significant because it substantially increase its sales and marketing infrastructure in the US.
