What About Amgen

Amgen is a stock that has been in my portfolio many times in the past few years as it was the first biotech company to reach a ridiculously cheap valuation. It would seem an obvious choice in playing a Genzyme takeover as it is the largest component of every biotech index and when the Genzyme cash comes rolling in it is sure to benefit.

While Amgen is a good choice as well, there are a few reasons I chose to go with Gilead. Gilead has been crushed lately while Amgen has held in relatively well making the valuation very similar. The difference is that Gilead is doing a very aggressive buyback while Amgen completed one in March and does not have as much onshore cash available. Additionally, sentiment on Amgen has been positive and I am more worried about an earnings disappointment.

All in all Amgen seems like an excellent choice but I want to wait until after earnings tonight before starting a position.

2 comments:

Anonymous said...

Wondering if i should take profits on my shorts or wait 1 more day?

Anonymous said...

I agree about Gilead over Amgen right now. Gilead has been left for dead and is much cheaper. Amgen has the advantage of selling biological drugs that cannot easily be duplicated even when they go off patent. But they also face a threatening change in treatment protocols and reimbursement for their kidney franchise.