Amgen (AMGN) - Get Amgen Inc. Report, which this column has featured previously, got a big slap on Thursday when an FDA panel committee decided that stronger warning labels, limited uses for patients and more safety testing are necessary for Aranesp, the company's No. 1 drug.
Amgen's anemia drug accounts for 28.6% of sales and right now, and it's hard to determine just how badly the FDA advisory committee decision will hit earnings.
But remember, Amgen is the largest biotech company, on the basis of revenue, in the world, and its numbers are still rock-solid. When you look at the numbers the company has posted quarter after quarter, it's hard to understand why it would get down to these levels.
That said, this issue may take some time to fix, and I could see the stock going down further. But company will rebound, because you don't get to be the No. 1 biotech company in the world without learning to survive a setback like this.
I don't want anyone to get confused -- Thursday's news was clearly a disaster. I'm not too sure just how long it will last, and analysts are downgrading the stock right and left, some even to sell from buy. This is a classic view of the operators on Wall Street in action; they are going to work to drive this stock into the ground.
Bottom line, Amgen has a boatload of new drugs in the pipeline, and this stock is way oversold -- and with the stock so cheap, value investors will start moving in and scooping up shares. So let's take advantage of it.
It was hammered after the first time I bought it, and it continued to get beat up to the point I know many of you were wondering, why keep buying? Answer: The cream always rises to the top. It's not a matter of if, it's a matter of when.
We are going to buy 10 deep-in-the-money (DITM) calls, going all the way until January 2008, where we will use the 45 strike (WAMAI) with a $12.50 limit order. It is important to be patient on an order like this. The January 45 traded $12.50 on Friday; I will let it come in. Remember, you are in the driver's seat, you are in control; don't let anything, or anybody, get in the way of your decision. It's very simple: The man with the gold makes the rules.
Game of Life
As we enter mid-May, the weather is warming, and so are the bats in baseball. (It is no secret that hitters prefer the warmer weather.) Four of the six divisional races in baseball are highly competitive, while the NL Central and the AL East are threatening to become runaways, owing to the marvelous play of the Milwaukee Brewers and the Boston Red Sox, respectively.
Los Angeles should be proud, as it boasts the NL West leader, in the Dodgers, as well as the AL West leader, via Anaheim, in the Angels.
The NL East continues to be a battle between the Braves and the Mets for the top spot, with each of them playing extremely well. The Red Sox, who are an impressive 14-6 on the road, have a comfortable eight-game lead in the AL East, after putting together an unlikely six-run ninth inning yesterday to claim victory over the Orioles.
There is no other team above .500 in the AL East. The red-hot Detroit Tigers have surged to the head of the pack in the AL Central, but the Indians, despite a mediocre last 10 games, remain right on their heels.
Meanwhile, the story of the young baseball season, from a team standpoint, is the perennial losers, the Milwaukee Brewers. The Brewers have not tasted the postseason since 1982, when they lost to the Cardinals in the World Series (the Brewers were members of the AL at that point). The only franchise with a longer history of postseason futility is the Montreal Expos-Washington Nationals.
Nonetheless, the young Brewers are clicking on all cylinders thus far. Four of their starting position players were drafted by Milwaukee. Moreover, their roster includes two youngsters with major league pedigrees, Prince Fielder, son of Cecil Fielder, and Tony Gwynn Jr., son of the Hall of Famer. Another youngster, Francisco Cordero, has emerged as a lights-out closer, accumulating 15 saves already this season.
Shortstop J.J. Hardy is of to a terrific start with 11 homers and 34 RBI. This substantial young talent requires patient, skillful leadership. Fortunately, the Brewers have a managerial pedigree, in that Ned Yost is a disciple of Braves manager, Bobby Cox. Regardless, the season, like the Brewers, is still young.
However, at the very least the Brewers are giving their fan base a legitimate reason to focus on a race other than the sixth-inning sausage race at home games. Who knows, perhaps Bob Uecker, the Brewers broadcaster, will actually get a great seat for the playoffs, after all.
Speaking of the playoffs, the conference finals in the NHL have begun with Buffalo vs. Ottawa in the East and Detroit vs. Anaheim in the West. The winners will face off for the honor of hoisting Lord Stanley's hallowed Cup.
The conference semifinals are being contested in the NBA. Dirk Nowitzki has been named the NBA's Most Valuable Player. Hopefully, for Dirk, the award will take some of the sting out of the Mavericks' unceremonious first-round exit at the hands of the Golden State Warriors.
The Players Club recognizes the difficulties in balancing individual accomplishments with team success. Invariably, the athlete's financial success has a dramatic impact on the most important team, his/her family. With guaranteed recurring cash flow, through our strategic partner, The Players Club endeavors to insure that the impact is substantial, in a positive manner, and more importantly, long-lasting.
Remember: Life is a journey; enjoy the ride!
At the time of publication, Dykstra was long AMGN.
Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.
Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.