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Amgen (AMGN) has a very bullish Chaikin Power Gauge stock rating and has been a market leader in the very strong Biotech group. The stock recently made a new high of 144.46 and then pulled back 5% with the market to a low of 136.32. AMGN triggered an oversold buy in Chaikin Analytics on Wednesday last week.
The company reported very strong 2nd quarter results in July, beating Wall Street estimates by 15%. In addition to reporting earnings of $2.37 vs. estimates of $2.07, Amgen guided higher for the full year 2014. They raised guidance to $8.20 - $8.40 vs. $7.57 in 2013. Analysts have subsequently raised their estimates for 2014 and 2015, with forward estimates for next year now at $9.00 - $9.10. This puts AMGN’s forward price earnings ratio at a very reasonable 15.3x. In addition, Amgen is one of the few Biotech companies to pay a significant dividend with the yield currently at 1.78%.
Amgen’s ability to increase the dividend or buyback more shares will be limited in the near-term because of the debt the company took on in their $10.4 billion purchase of Onyx Pharmaceuticals in October of 2013. The long-term benefits of that acquisition are significant, however, because Onyx has a number of late stage cancer treatment drugs in their pipeline which are expected to add substantially to revenue by 2018.
Amgen itself has a very strong late-stage pipeline of promising drugs to treat heart failure (Ivabradine) and high cholesterol. The company announced two sets of positive Phase 3 results for anti-cholesterol treatments on Wednesday, and earlier had received accelerated review status for Ivabradine.
As one of the world’s preeminent Biotech companies, AMGN is an excellent long-term growth holding with less volatility than the Biotech group as a whole. In the short-term, the stock should see new highs as the market recovers from last week’s selling. Use any pullbacks in Amgen of 2 – 4 % to establish trading and investment positions. Expect the stock to meet Wall Street price targets of 155 – 160 in a post-election rally.
AMGN has a very bullish Chaikin Power Gauge stock rating, with all four components ranked as very bullish. In addition to very strong Price/Volume activity driven by positive Chaikin Money Flow and strong price action relative to the market, Amgen has had a consistent record of earnings growth and generates substantial free cash flow. This should enable AMGN to bring down its debt to equity ratio and resume share buybacks and dividend increases within the next 18 months.
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Chaikin Analytics stock research
Chaikin Power Gauge stock rating model
NASDAQ Chaikin Power Stock Indexes
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
