In biotechnology, corporate success is a function of approved drugs, pipeline activity and positive cash flow. By those standards, one of the most successful firms in the industry is a 27 year old Thousand Oaks, California outfit that was among the first developers of blockbuster biopharmaceuticals.
Amgen (NASDAQ: AMGN) is a biotechnology firm engaged in the discovery and manufacture of human therapeutics. It markets products in the areas of supportive cancer care, nephrology, inflammation, and oncology. Principal offerings include anemia treatments Aranesp and Epogen, rheumatoid arthritis drug Enbrel, and white blood cell stimulator Neupogen. Amgen has marketing alliances with Hoffmann-La Roche and Kirin. Competitors include Baxter International (NYSE: BAX), Johnson & Johnson (NYSE: JNJ) and Novartis (NYSE: NVS).
The company pleased the Street earlier in the week, when it said it expected 2007 adjusted EPS of close to $4.30. That was above the firm's previous guidance range ($4.13-4.23) and the consensus analyst view ($4.24). Management also announced that it plans to move ten molecules into mid-stage trials this year.
AMGN shares popped on the news and then began formation of a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the stock with two "strong buys", seven "buys", nineteen "holds" and one "sell". The AMGN P/E ratio (17.40), Price to Book ratio (3.06), Price to Cash Flow ratio (12.13), Price to Free Cash Flow ratio (14.00), Operating Margin (26.32%), Net Profit Margin (21.29%), Return on Assets (9.58%) and Net Income per Employee ($158.20k) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 73% of the outstanding shares. The stock is one of those used to calculate the S&P 100, S&P 500 and Nasdaq 100 Indexes. Over the past 52 weeks, it has traded between $44.55 and $76.95. A stop-loss of $41.35 looks good here. Note that the firm is expected to release fourth quarter results in about two weeks.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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Reader Comments (Page 1 of 1)
1-11-2008 @ 3:20PM
ANGIE said...
Hi Larry,
My name is "Angie"; My hero on American Idol is Simon; however, he is untouchable or reachable; Pls deliver the following msg:
Simon; My name is Angie; I am 49 yrs old, smoke & drink (vodka/OJ) when needed; I used to be a "solfego student"; Used to sing "Alto" and played piano and drums; Now... I am 49 with smoke inhaled lungs (very little voice left); still smoking 5/6 +/- cigs per day; (voice seems to be coming back); play the piano (NO) because my sister took it away from me.... Play drums (whenever I get the chance); I am an old sould; I am 49 yrs old and look like 30 (on a good day); anyway, I love your kick-ass opinions and the "Truth" which you speak (more power to you); I respect your business sense; my greatest wish is to meet "Elton jOHN" (Elvis, Marily & Patsy Cline are gone); also, I would LOVE to meet Celine (There is only ONE Celinw); Sooo, if you indeed make dreams come true, perhaps you can find it in your heart to help me ?? I am a "Kerosene Angel" with an Extemely "Tende Heart" and an "open soul";I hope that Larry will give you this msg; PS: Tina Turner is my "BIG" fan... Respectfully, ANGIE ~~ Hope to hear from you !