"Perhaps because the market has whacked the stock, the valuation is dirt cheap and perhaps they will have a few good drugs in the future! IfSteve's right. The stock has been whacked, down 23% from its recent high in January. At Wednesday's closing price of $58.13, the stock is trading at 13 times estimated 2008 earnings per share of $4.36, and expectations are low. But where Steve sees value, I see a value trap. If we assume the Street's crystal ball for Amgen's future earnings is accurate (and I think that's a very risky assumption,) the company will post earnings growth of 8% this year, 4% next year and 10% in 2009. I'm sorry, but that's weak growth for a company that clings to the notion that it's still a member in good standing of the biotech club. I don't see why a 13-14 multiple is justified for a company with single-digit earnings growth, especially one that will get there mainly by cutting costs and buying back shares.
Amgenwas trading at 20-30 times earnings, sure, but I believe it is tradingat 14 times earnings. Would you rather buy at 90 when expectations are high or 55 when there are very low expectations?"