BigOlDave

Amgen Partners with Glaxo to Distribute Prize Pipeline Product

I just posted the following on Yahoo Finance:

Amgen (AMGN) looks like an interesting investment at this point in time. As a sanity check, I went to other analysts. Here’s what I found:

· FirstCall averages a “Buy” with 9 Strong Buys, 8 Buys, and 4 Holds.

· Consensus from all broker/dealers (23 of them, mostly the same as FirstCall) average “Overweight”.

· S&P rates AMGN “Hold”, having recently increased it’s 12-mo target to (get this!) …$66.00.

· Reuters rates it overall “Neutral”, but “Outperform” on Quality (rated down on technicals and price catch-up).

· The MSN Stockscouter rates it an “8” (out of 10), noting positives of better earnings growth and very favorable price-to-sales multiple.

· StoXline – which bases estimates mostly on the chart patterns – predicts a 12 month target of $85.95.

· Value Line rates its Timeliness = 2, Safety = 1, and Technicals = 5, concluding “Amgen is loaded with cash and should be able to ride out the near-term volatility, while continuing to develop key components in its pipeline.”

· The Motley Fool investing community rates AMGN 4 stars out of 5

It seems like everyone is waiting until the FDA formally approves Denosumab drug for osteoporosis (10/19/09) and later for bone cancer. The recent Denosumab marketing agreement with GlaxoSmithKline is nicely backloaded, meaning you buy-and-hold folks can be comfortably leave Amgen in your portfolio and take a nap for the next 3 years.

Amgen traded at a high of $84.86 four years ago. The $85.95 target for August 2010 seems ambitious. But $75.00 does not look like a stretch. That would be a very safe 19% gain in what looks like a sideways-moving market.


Sentiment : Buy

Amgen May Have a Winner on Its Hands

Amgen (AMGN) is down 3% today: after a run-up to $59.50 on 7/8/09, it’s still rated a “Buy” with a 12-month target of $83.15. AMGN traded for $66 as recently as 9/16/08. Historically earnings have increased about 17%/year. P/E was at a high of 101.1 (in 2002) and as low as 10.2 (2008). An average P/E for the Biotechnology & Drugs / Healthcare Sector is 18.7.

Current earnings are $3.85. With 17% growth and a P/E of 18.7, I calculate a 07/09/09 target share price of $84.23. That’s a gain of about 46%. If the company’s Denosumab drug for osteoporosis gets to market on time, this will have a “Blockbuster” impact on earnings, returning Amgen to an annual earnings growth rate of at least 25%.

At today’s price ($58) and an unreasonably low P/E of 13.4, Amgen stock has been overlooked, particularly in a market that has so few sure bets available at low prices.

Dave