Stock (Symbol) |
Amgen (AMGN) |
Stock Price |
$150 |
Sector |
| Healthcare |
Data is as of |
| June 20, 2016 |
Expected to Report |
| Jul 28 – Aug 1 |
Company Description |
 Amgen Inc. (Amgen) is a biotechnology company. The Company is engaged in discovering, developing, manufacturing and delivering human therapeutics. The Company’s sales and marketing forces are located in the United States and Europe. In the United States, it sells its products to pharmaceutical wholesale distributors. The Company also markets certain products directly to consumers through direct-to-consumer print and television advertising, as well as through the Internet. Outside the United States, the Company sells its products to healthcare providers and/or pharmaceutical wholesale distributors. The Company’s products include Neulasta (pegfilgrastim)/NEUPOGEN (filgrastim), Enbrel (etanercept), XGEVA/Prolia (denosumab), ESAs (erythropoiesis-stimulating agents), Sensipar/Mimpara (cinacalcet), Kyprolis and Evolocumab, among others. Source: Thomson Financial |
Sharek’s Take |
 The iShares Nasdaq Biotech ETF (IBB) is about to break support, and if it does the entire sector could be in for a selloff. What’s spooking investors is the possibility of a Clinton Presidency as she will look to lower drug prices. Meanwhile Amgen has been relying on price increases to drive growth. Amgen is the daddy of biotech stocks, having gone from $1 to $150 since 1990. In 2011 it became the first biotech to start issuing dividends and has increased the dividend each year since — from $0.56 to $4.00 in just 5 years. The company has multiple blockbusters on the market, and a robust pipeline with 10 new drugs expected by 2019. But its new drug Repatha isn’t providing the sales boost analysts had expected since it was approved in the U.S. last August. Although profit growth is expected to average just 2% the next 4 qtrs, management systematically underpromises to overdeliver. Last qtr profits were expected to increase just 4% and the company grew them 17%. Management also buys back a ton of stock and pays a $1 dividend per qtr. Amgen carries a top safety rating and an estimated long-term growth rate of 8% in addition to a 3% yield, for an estimated total return of 11% per year (hypothetically). At 13x earnings this is a core holding for conservative investors who think long-term (as in after the elections). |
One Year Chart |
 AMGN grew profits 17% last qtr on a 10%% an increase in sales. The company is focused on cutting costs (including) and buying back shares and that helps EPS growth. The company whipped the $2.59 profit estimate by 31 cents — and beat by 31 cents and 34 cents the prior two qtrs. Analysts predict 7%, 2%, 6% and -6% profit growth the next 4 qtrs, but I suppose AMGN will beat again. With a P/E of 13 the stock is a value. |
Fair Value |
 This is really the cheapest the stock’s been since 2013. There’s solid upside to my Fair Values of $167 for this year and $182 next year. The company has been increasing annual estimates too, so these Fair Values could rise. Notice when the P/E was down during 2008-2012 the stock was a real value. I think it’s a value now. |
Bottom Line |
 Amgen is one of the all-time great stock market winners and continues its journey as a core holding for conservative accounts. Right now the Biotech sector is having trouble, but I feel the fear is giving investors a good opportunity to get in. This company has a good pipeline of drugs, a stock buyback program, a dividend that’s been increasing rapidly, and its been overdelivering on profits. But due to the fact the stock isn’t timely AMGN ranks just 28th of 37 stocks in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 28 of 37 |
