Amgen-AMGN - 2007/06/05 15:18
Amgen is a company working in the healthcare industry. They deal with producing new products that keep up with advances in healthcare (cancer, etc). They just recently purchased a company that deals with kidney disease. I think this company is possibly more of a long term investment than we are dealing with. I think they will be consistent with their growth over the next 5-10 years but if we don't want to wait that long to see progress I suggest we hold off on purchasing this company.
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Chelsea
Re:Amgen-AMGN - 2007/06/06 22:36
AMGN I agree that the company would be good long-term buy, but as of right now, I believe we should not purchase AMGN. I compared AMGN with its competitors BAX, JNJ, and NVS; it was clear that all three competitors outperformed AMGN. Even though the estimated growth will probably be consistent in the future, it is probably a good idea to hold off on decisions to purchase this company. I think Carissa is on the correct track with her discussions on this particular company. I suggest we focus on companies that may have a clearer short-term payoff.
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admin
Re:Amgen-AMGN - 2007/06/07 00:53
I added some more companies to the valuation report and now have the Amgen trading at a discount of about 20% to it's peers. I have attached the updated valuation report to this post, please download it.
I do think it is difficult to compare healthcare companies because of the differences in products. However, I think that the Amgen management has proven that they want to increase shareholder value. On May 25, 2007 the board announced that they would be buying back $3 billion worth of Amgen stock (about 4.5% of the current shares outstanding). As we witnessed with our previous holding in Medco Health Solutions (MHS), a share buyback can catapult a company passed expectations and provide support in a weak market. Because of the share buyback, technically this company is trading at a 24.5% discount to it's peers.
Carissa, do the fundamentals really say that this company should be trading at a 24.5% discount. Of course, there might be setbacks in product development, but they have a strong pipeline of drugs in the testing stages and I think that we should be buying on any weakness, making now the perfect time to get in.
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Carissa
Re:Amgen-AMGN - 2007/06/08 18:20
After further looking into this company, they seem to show some growth in acquring companies. Amgen has had a few big biotech buyouts in the past ten years. A $2 Billion dollar buyout in 2005 and even bigger $17 Billion in 2001. Recently they purchased Ilypsa and Atlantos, with both of these come new drug ideas which could push forward the unimpressive growth rates. I would like to hear what everyone thinks about this. I'm not sure if the buyout of these other privately owned companies will be able to compete with the quickly growing drug advances. I'm wondering why their growth rate for the next year is only at 7%. Why don't they have confidence in their buyouts?
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admin
Re:Amgen-AMGN - 2007/06/08 18:58
I think one of the issues that next year’s growth is below average is due to the number of buyouts they are making. Whenever these big biotechnology companies look to acquire smaller companies, they don’t buy them out when they have a viable product on the market, they buy them out in the testing phases of a potential drug. Biotechnology requires a lot of diversification to be successful, because you might have five products fail for every one successful product that comes to market. However, that one product could be a blockbuster and increase value tremendously. You are also buying the pipeline of drugs that are in the testing phases. If a company has a consistent drug pipeline then you can expect to pay more now because once those drugs are approved they will begin to generate a lot of profit. Biotech is a high margin business, a lot of money goes into the development phases, but once the drug has been approved it costs very little to manufacture it. That would be my explanation as to why growth might appear slow now, but could quickly accelerate in the future.
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mrjm
Re:Amgen-AMGN - 2007/06/09 19:06
I believe this company has a lot of promise for our portfolio, when I was looking at some companies in the health care area, I was intrigued by them. They recently made that play into the kidney disease market which would be in competition with DVA, which we voted to buy. I think AMGN would be a good company because they are very diversified in their business and even though they could lose out on several drugs/products they should still have a wide enough product line to protect themselves.
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