Given that Neulasta accounts for 25% of Amgen's revenue, these are valid concerns. But it also assumes that Amgen management would just allow their market to be taken away.
Teva and other rivals would need a much bigger marketing and distribution infrastructure before Amgen, an established market leader, could be dethroned.
Despite the naysayers, Amgen continues to invest in strong growth areas like oncology. The company's $10 billion deal for Onyx Pharmaceuticals demonstrates how committed management is towards preserving Amgen's market position.
The way I see it, it's only a matter of time before the Onyx buy begins to pay off. And that's not going to happen in just one quarter or two. Making a play here on Amgen is about the future. That's where a focus on the fundamentals become important.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates AMGEN INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMGEN INC (AMGN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMGN's revenue growth trails the industry average of 36.6%. Since the same quarter one year prior, revenues slightly increased by 6.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $1,142.00 million or 8.86% when compared to the same quarter last year. In addition, AMGEN INC has also vastly surpassed the industry average cash flow growth rate of -71.74%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- AMGEN INC's earnings per share declined by 25.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMGEN INC increased its bottom line by earning $6.65 versus $5.51 in the prior year. This year, the market expects an improvement in earnings ($8.10 versus $6.65).
- You can view the full analysis from the report here: AMGN Ratings Report