- Stifel notes that since January, Amgen (NASDAQ:AMGN) has been bombarded with news of safety hazards, regulatory concerns, reimbursement problems, and aborted trials, dropping shares to a highly attractive price from a valuation standpoint. While the firm would be buyers of shares at this price they would remain cautious as investors, since, in their opinion, Amgen still faces a number of events that will insure the price of shares will remain volatile through the rest of 2007.
The firm adjusted their model to reflect trends in IMS script data through 3/23/ 07 and have downwardly adjusted 1Q07 revenue estimates for most drugs and most significantly for the epoetin franchise. While the decline in January and February was similar in 2006 and 2007, in March 2007 the decline in prescriptions continued unlike in 2006. This fall off coincides with the FDA black box warning for ESAs such as Aranesp and Epogen, and follows the USP DI delisting of Aranesp for AOC. While Amgen reiterated guidance for 2007 on March 1, Stifel believes that they will be forced to downwardly adjust guidance during the first quarter conference call to reflect the fall off of epoetin prescriptions and potential reimbursement issues.
They would use Amgen as a trading engine, buying on weakness or overreaction and selling on strength, but would not be long term holders until safety, regulatory, and reimbursement uncertainties have been resolved. Tgt is lowered to $65 from $91. Maintains Buy.
Notablecalls: Let's see how the stock takes the news today. There will be some sellers following the guidedown comments, so I'm interested to see when & where the buyers are willing to step in. They better step in 1 pt lower or we may see AMGN going lower...much lower. Stiffy's right about AMGN being a trading engine. If indeed we get warning from AMGN, you can surely buy the gap down for a decent bounce.