Buy the Dip on This New Dow Stock

AMGN options are affordably priced to boot

Digital Content Manager
Oct 12, 2020 at 2:14 PM
facebook twitter linkedin


The shares of blue chip Amgen, Inc. (NASDAQ:AMGN) are up 1.8% at $241.07 this afternoon. However, the biopharmaceutical stock has traded sideways the past few months after hitting an all-time-high of $264.97 on July 6, and is off by 5.2% this quarter. The good news is that this pullback has the stock near a historically bullish trendline, which could help the security surge even higher in the coming weeks.

Specifically, Amgen stock just came within one standard deviation of its 160-day moving average, after spending the past several months floating above the trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, three similar signals have occurred during the past three years. More often than not, AMGN enjoyed positive returns one month after each signal, averaging a roughly 4% gain. From of its current perch, a move of similar magnitude would put the security just above $250 -- a new record high.

AMGN 160

While the majority of analysts covering AMGN are already bullish, there is still plenty of room for upgrades and price-target hikes going forward, which could propel the equity higher. Of the 21 in coverage,  nine say "hold" or worse. Plus, the 12-month consensus price target of $260.79 is only a 8% premium to current levels.

For those wanting to take advantage of Amgen stock's next leg higher, options could be an interesting play. The stock's Schaeffer's Volatility Index (SVI) of 35% sits higher than just 28% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners