The biotech industry has been on an outstanding run over the past year, and some top analysts on Wall Street think that run could be poised to continue. A new research report from Cowen focuses on the top stocks to buy before second-quarter earnings are reported. It can be a little risky to buy stock in from of earnings data, as there is always a chance of a straight miss, poor forward guidance or both. The Cowen team is sticking with some of the industry big boys, which tend to smooth out some of the potential downside risk.
We screened the Cowen list for the four that they are very bullish on in front of the second-quarter prints.
Amgen Inc. (NASDAQ: AMGN) posted outstanding first-quarter results and the biotech giant remains a top stock for investors to buy. First-quarter 2015 earnings were $2.48 per share, soaring above consensus estimate of $2.07 and the year-ago earnings of $1.86. Total revenues increased 11.3% to $5,033 million in the first quarter, and the stellar earnings were driven by higher revenues and lower operating expenses.
Many on Wall Street point to the company’s tremendous pipeline and outstanding forward earnings and revenue capabilities. Amgen’s double-digit earnings and revenue growth rate is expected to continue for the foreseeable future because of the company’s very deep clinical pipeline, which include potential blockbusters Repatha for high cholesterol and Kyprolis for relapsed multiple myeloma. Amgen also has one of the industry’s deepest biosimilar pipelines, which is expected to generate upward of $3 billion in annual sales in the years ahead.
Amgen continues to trim its gigantic workforce as it bows to activist hedge fund shareholders. One of them is hedge fund manager Dan Loeb, whose Third Point raised its stake in Amgen to $1.7 billion. Loeb has been pushing the biotech giant to split into two separate companies to boost shareholder value.
This is a Cowen favorite and the analyst is expecting an earnings beat and a guidance raise. It also expects top and bottom line upside driven by Enbrel (with an additional price hike thrown in for good measure) as well as most other products and solid cost controls. The Cowen team sees Amgen trading multiplewise more like a large cap pharmaceutical than a biotech. Amgen reports July 30.
Amgen shareholders are paid a 1.95% dividend. The Cowen price target for the stock is $189, and the Thomson/First Call consensus price target is $178.53. Shares closed Friday at $163.27.