Slashed Forecast Casts Shadow on AMGN After Earnings

The stock does have a history of doing well in August

Deputy Editor
Aug 4, 2021 at 11:19 AM
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The shares of Amgen, Inc. (NASDAQ:AMGN) are slipping this morning, last seen off 1% at $241.60, after the firm lowered its full-year net earnings guidance, noting that the pandemic has kept a lid on the number of new patients beginning treatment, and that it expects Covid-19 to "continue to impact our business during the second half of the year." Amgen reported a rise in its second-quarter revenue, which fell in line with analysts' estimates, while its profits for the quarter beat expectations. 

Analysts are adjusting their price targets in response to the mixed report. SVB Leerink slashed its price estimate to $234 from $238, while J.P. Morgan Securities lifted its price target to $231 from $221. The 12-month consensus price target of $254.48 is a 6.7% premium to current levels. 

The majority of analysts in coverage were already cautious on AMGN coming into today. Twelve considered the stock a "hold" or worse, while eight called it a "buy" or better. 

Options traders are targeting puts at a clip that's four times the intraday average. So far today, 2,148 puts have exchanged hands, compared to 1,415 calls. The weekly 8/6 235-strike put is the most popular, followed by the August 240 call. 

It's worth noting, that despite the pessimism surrounding AMGN at the moment, the stock tends to do well in August. This is per a list of 25 stocks on the S&P 500 with the best one-month returns over the past 10 years, courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. According to this data, AMGN has finished August with a monthly win in eight of these instances, averaging a return of 1.7%. 

best of august

If past is precedent, this could keep AMGN from falling back toward its April trough near the $231 mark, touched shortly after the biotech's last earnings report. The $234 level could provide some support as well, as it helped the stock stage a bounce in early June. For the year, AMGN is sitting at breakeven. 

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