Apple (NASDAQ: AAPL) closed at $98.44 on Monday. AAPL is expected to report EPS today after the market close today. AAPL November option implied volatility of 83 is above its 26-week average of 52 according to Track Data, suggesting larger price movement.
Amgen (NASDAQ: AMGN) closed at $53.35 on Monday. AMGN is scheduled to report Q3 EPS on October 22. Goldman Sachs says: "Focus on pipeline and balance sheet." AMGN November option implied volatility of 47 is above its 26-week average of 37 according to Track Data, suggesting larger price movement.
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 metabolic diseases. 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. Baxter International (NYSE: BAX), Johnson & Johnson (NYSE: JNJ) and Novartis (NYSE: NVS) and major competitors.
The company pleased the Street late last month, when it announced Phase 3 trial results showing that its experimental osteoporosis drug significantly reduced the risk of bone fractures in post-menopausal women. As well, the firm reported Q2 EPS of $1.14 and revenues of $3.76 billion. Both measures topped consensus Street estimates ($1.02, $3.58 billion). Management also guided FY08 EPS to $4.25-$4.45 ($4.19 consensus) and FY08 revenues to $14.6-$14.9 billion ($14.42B consensus). Eight brokerages subsequently declared AMGN a "buy" and issued price targets in the range $67-$80.
Amgen Inc. (NASDAQ: AMGN) is having a really good day today. Its shares closed up 12.17% to $60.48 (on a day markets were down in the neighborhood of 2%) after it said late Friday a study on denosumab, a bone-strengthening drug, met its desired results and showed statistically significant improvements over a placebo.
Amgen shares rocketed 17% at some point as denosumab has the potential to become a blockbuster drug, especially with women with postmenopausal osteoporosis, a market that could represent $8 billion and $10 billion by 2010. The strong study results also improve the drug's chances with FDA approval. Analysts just loved the results of the study (although the details won't be out until September), upgrading the shares and their target prices.
To top it off, Amgen reported second-quarter financial results after the close, beating analyst estimates. The biotechnology giant recorded net income of $941 million, or 87 cents a share, lower than last year's period, but excluding acquisition-related and stock-compensation costs, earnings rose to $1.14 a share from $1.13. Revenue rose 1% to $3.76 billion. Analysts forecast profit of $1.02 per share on revenue of $3.58 billion, according to a survey by Thomson Financial. Looking ahead, Amgen raised both its earnings and revenue guidance higher than what Wall Street expected. Analysts, in general, liked these results too.
Not all has been rosy with Amgen lately, as the sales of Aranesp, its anemia treatment and what is considered Amgen's most important product, show. Aranesp sales declined 13% on safety concerns. Sales of Epogen, the older treatment, also declined somewhat. Still the sales of both beat estimates.
Amgen's stock has already been punished for the Aranesp concerns throughout 2007, and has been recovering since, today hitting a 52-week high. Amgen showed better-than-expected sales across all products, even its under-scrutiny anemia drugs; it showed it's not resting and that it can and will recover. Combine that with the strong clinical trial results for denosumab, and the potential is great.
Amgen shares are up about 2.8% in after-hours trading to $62.15.
MOST NOTEWORTHY: The airline sector, Siemens and Internap were today's noteworthy downgrades:
Lehman downgraded the airline sector to Neutral from Positive, citing higher fuel costs and the weakening economy. AirTran (NYSE: AAI) and U.S. Airways (NYSE: LCC) were downgraded to Equal Weight from Overweight. UBS said it can no longer recommend airline stocks due to weakening economy, high fuel prices, and less likely industry consolidation. The firm downgraded Continental Airlines (NYSE: CAL), Delta Air Lines (NYSE: DAL), Northwest Airlines (NYSE: NWA) and U.S. Airways to Neutral from Buy.
Goldman removed shares of Siemens (NYSE: SI) from their Conviction Buy List as they believe the company may book additional charges of $1.2B this year.
Jefferies cut Internap (NASDAQ: INAP) to Underperform from Buy as they believe the 10-K filing delay and revenue quality questions reduce visibility into the health of the business.
OTHER DOWNGRADES:
Wachovia lowered Amgen (NASDAQ: AMGN) to Market Perform from Outperform.
SI International (NASDAQ: SINT) was downgraded to Neutral from Outperform at Cowen.
On 3/13/08, the FDA Oncologic Drugs Advisory Committee (ODAC) is scheduled to review the use of Erythropoiesis stimulation agents, including Aranesp and JNJ's Procrit, to treat chemotherapy induced anemia.
AMGN March option implied volatility is at 51; April is at 41; above its 26-week average of 33 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
It is interesting to see how one piece of news can have a different impact on two stocks. The news? The Food and Drug Administration found that anemia drugs are tied to increased risks of death and faster-spreading tumors at high doses.
Amgen Inc. (NASDAQ: AMGN) makes Aranesp and Epogen, while Johnson & Johnson (NYSE: JNJ) makes Procrit, all used to help cancer and kidney disease patients overcome anemia. But now the FDA says these drug show greater risks for patients with certain cancers on tumor progression and survival, as well as blood clots. While both companies believe the risks were seen when the drugs were given for unapproved uses, including higher-than-recommended doses, it is possible that following the study, the FDA may recommend to end the use of these drugs for patients whose anemia is caused by cancer chemotherapy, or who are at greater risk, but still allow it for kidney disease patients.
Still, as some analysts believe, with the recent updates both companies had on product prescribing and labeling, it is unlikely the drugs will be completely inadvisable for use in cancer patients as they allow the cycle of chemotherapy to continue more smoothly, helping to strengthen them after each treatment. It is more likely the companies will work with the FDA for better regulation on these drugs.
On the news, Amgen shares fell nearly 2%, while JNJ shares climbed over 1%. Surprising? Not really.
On 3/13/08, the FDA Oncologic Drugs Advisory Committee (ODAC) is scheduled to review the use of Erythropoiesis stimulation agents, including Aranesp and Procrit, to treat chemotherapy induced anemia.
AMGN March option implied volatility is at 45; April is at 38; above its 26-week average of 32 according to Track Data, suggesting larger price risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Amgen Inc. (NASDAQ: AMGN) stock is falling on news that a study appearing in the Journal of the American Medical Association argues that treating cancer patients with anemia drugs increases their risk of blood clots and death. This could be bad news for AMGN, whose drug Aranesp was used in the study along with Johnson & Johnson's (NYSE: JNJ) Procrit. Researchers said the drugs increased the risk of death by 10 percent. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMGN.
After hitting a one-year high of $66.06 last February, the stock hit a one-year low of $43.93 in January. This morning, AMGN opened at $46.90. So far today the stock has hit a low of $46.66 and a high of $47.15. As of 11:05, AMGN is trading at $46.79, down $1.03 (-2.2%). The chart for AMGN looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
While Michelle Obama's rather outlandish comment hasn't gotten a lot of mainstream media play, I would like to present two American stocks that even she would be proud of.
Michelle Obama said, "for the first time in my adult lifetime, I am really proud of my country." Now Michelle hasn't exactly led a life of your typical third world citizen. She graduated from Princeton University and Harvard Law School. While America may not be perfect, it is by far and away the greatest nation on earth. If she was so anti-U.S. for the last 25 years, why did she bother staying? The fact that millions of people are trying to enter the U.S. every year means something. You don't see people crowding into boats to be smuggled into Cuba (enjoy your retirement, Fidel).
I will not go into all the things that we can be proud of as Americans that have occurred over the last 25 years. What I will do is present two great U.S. companies that will make you proud. They have not only created products that have been an enormous help to people around the world, but also make for potentially intriguing investments.
Amgen Inc. (NASDAQ: AMGN) shares are trading higher this morning after the company reported a fourth-quarter profit of $835 million, or 76 cents per share, yesterday after market close. Excluding a mix of one-time buyout and restructuring charges, it earned $1 per share, beating analysts' expectations of 97 cents per share. However, 2008 forecasts were a little light, with the company expecting a slight dip in revenue due to FDA scrutiny over its erythropoiesis-stimulating agents, include Aranesp and Epogen, which depressed sales slightly in the fourth quarter. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on AMGN.
After hitting a one-year high of $75.01 last January, the stock hit a one-year low of $43.93 on Tuesday. AMGN opened this morning at $47.52. So far today the stock has hit a low of $47.49 and a high of $48.26. As of 10:20, AMGN is trading at $48.00, up $1.88 (4.1%). The chart for AMGN looks bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $40 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just two months as long as AMGN is above $40 at March expiration. Amgen would have to fall by more than 16% before we would start to lose money.
AMGN hasn't been below $43 at all in the past year and has shown support around $45 recently. This trade could be risky if the one of the company's drugs gets in trouble with the FDA or something of that nature, but even if that happens, this position could be protected by the support the stock has recently found right at $45, where it has bounced twice in the past month.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in AMGN.
Apple
Here are some highlights from this past week's 
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Amgen
While Michelle Obama's rather outlandish comment hasn't gotten a lot of mainstream media play, I would like to present two American stocks that even she would be proud of.
Big 3 CEOs drive to Washington to suck up to Congress
GM and Ford ready weak pitches for taxpayer bucks
Cramer on BloggingStocks: A troika of opportunity and trouble 
