Amgen Stays a Long-Term Hold

Amgen, Inc. (AMGN - Analyst Report), a global biotechnology company, is focused on the development and commercialization of human therapeutics. The company's key products are Epogen/Aranesp (anemia), Neupogen/Neulasta (neutropenia), and Enbrel (inflammatory disease). Results over the past few quarters demonstrate the challenging, but stabilizing ESA market.

Nevertheless, we still feel as though the pipeline is significantly undervalued, and we continue to recommend the name as a long-term Hold within the biotechnology sector. Recent positive news on phase III denosumab is a big reason we continue to be positive on Amgen. Our price target is $56.

Based on our 2009 through 2013 model, the 5-year earnings CAGR [compound annual growth rate] of 7% is generally in-line with that of most large-cap pharmaceutical companies. Yet it is well below some of the larger biotechnology peers such as Genentech (DNA), Biogen (BIIB - Analyst Report), Celgene  (CELG - Analyst Report), Genzyme (GENZ - Analyst Report) and Gilead Sciences (GILD - Analyst Report), which should deliver greater than 10% growth over the same time period. That should help investors value the stock on a multiple basis.