Amgen's Earnings & Guidance Make It Almost Look Like A Value Stock

Amgen Inc. (NASDAQ: AMGN) has announced earnings after the company released some positive data this morning.  The troubled biotech giant posted $1.00 EPS on a 2% drop in revenues to $3.7 Billion.  Amgen estimates from First Call were $0.97 EPS on revenues of $3.54 Billion.  It looks like the company’s 2007 EPS number was a penny light of a range.

The company is also putting guidance for 2008 in a $4.00 to $4.30 adjusted EPS range on $14.2 to $14.6 Billion in revenues. Estimates from Wall Street were $4.37 EPS on almost $14.5 Billion.  With a $46 handle on the stock and at the low end of $4.00, have you ever heard of a biotech with a forward P/E of 11.5?  This is showing up on every value investing screen out there, but there are obvious reasons that many aren’t pulling the trigger.  We’ve noted in the past how this was being treated like a Big Pharma drug stock.  The question is "what happens in 2009 or 2010?"….

This one has been troubled over safety and reimbursement rates for so long that it’s hard to imagine anyone being overly stringent on the forward estimates.  If any biotech company needs to go make a diversification acquisition into a new arena in biotech for entirely different treatments, that would be Amgen. 

It also has positive results on osteoporosis, so there are some positives other than just "not as bad as it could have been"….. Shares closed up 3% at $46.12 in normal trading and shares are up over 1% at $46.75 in after-hours trading. We’d still rate this one with a passing grade so far today based on the preliminary information.

Jon C. Ogg
January 24, 2008