Stock (Symbol) |
Amgen (AMGN) |
Stock Price |
$174 |
Sector |
| Healthcare |
Data is as of |
| September 22, 2016 |
Expected to Report |
| Oct 26 – 31 |
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 |
 Shares of Amgen have rallied from $150 to $174 since we looked at the stock last qtr. There’s a couple of reasons for the move higher. First Biotechs have rallied as Clinton is loosing her lead in the presidential election (AMGN gets a lot of its growth off price increases, which she vows to combat). Also, the stock was undervalued last qtr as the P/E was just 13. Now with a P/E of 15 the stock is reasonably priced. 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 including late stage drugs to combat osteoporosis, migraines and heart failure. The company also sports a 50% profit margin, up from around 40% a few years ago. Amgen is one of America’s safest stocks. Management systematically underpromises to overdeliver and also buys back tons of stock to help boost profits. It has an estimated long-term growth rate of 8% in addition to a 2% yield, for an estimated total return of 10% per year (hypothetically). |
One Year Chart |
 Last qtr AMGN grew sales 6% and profits increased 11% with the help of better profit margins via cutting costs and price increased as well as stock buybacks. Profits were expected to rise 7%. One thing that wasn’t great is the company only beat the street by 10 cents after beating by more than 30 cents the prior three qtrs. Profit growth Estimates for the next 4 qtrs are: 3%, 8%, 0% and 4% but management sets the bar low. 2016 profit estimates have increased over the last 4 qtrs from $10.66 to $10.82, $11.13 and currently $11.36. |
Fair Value |
 This stock quickly shot up to my Fair Value. Took one qtr to go from $150 to $174. Now I feel AMGN could take a breather depending on what happens in the November elections. Still, even with the higher valuation, the stock has 8% upside to next year’s Fair Value plus a qtrly dividend of $1. |
Bottom Line |
 Amgen is a solid conservative stock for long-term investors. Management does a lot of good things including drug development, stock buybacks and healthy 30% increases to the dividend (2011-2016). The company has good growth opportunity for the future with its array of new drugs that are in development. AMGN ranks 26th of 36 stocks in the Conservative Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 26 of 36 |
