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Amgen Inc Up to Earnings

Jul 22 2008

Amgen Inc Up to Earnings 

Amgen Inc (AMGN) is looking very attractive heading into earnings with the additional good news of Nplate being approved by the Food and Drug Administration on Wednesday or Thursday.

Strong Volume

            Amgen Inc has been on a nice run since it broke out of a range on June 24th, moving from 45 to 55 in a month’s time. Over the past 10 days, Amgen’s daily volume has increased to an average of 12 million shares a day compared to a three month average volume of only 9 million shares a day. This additional 3 million shares a day in volume is a bullish sign coinciding with the increased price.

Options

            The front month options for Amgen were also bullish today as investors were active in the 57.50 August Calls. With the stock price currently at $54.60, Calls at strike prices of 55 and 57.50 having strong demand demonstrates investor’s bullish bias in the near term for the stock.

NPlate

            NPlate is a drug developed by Amgen to treat blood-clotting disorders that is set to receive FDA approval this week. 200,000 people in the United States are affected by the disease that NPlate treats. An outside panel recently recommended approving the drug and the FDA is expected to follow the panel’s suggestion and clear the drug for use. Not a huge market for a drug but the stock is still demonstrating strength going into the announcement.

Earnings

            In addition to the NPlate approval, Amgen also announces their quarterly results on the 28th on July. Not only is Amgen on deck for an earnings release but the rest of the week is full on drug and biotechnology stocks reporting. As other companies report outstanding results as Biogen Idec did today, Amgen stock should continue to rally.

The Trade

            Buying Amgen ahead of the NPlate approval and their earnings is appropriate. Waiting for a dip in the morning and avoiding buying after a bounce of over 3% during the day are good guidelines. Place a stop 7.5% below its current price to limit your risk in case of a down turn. Sell your position during the day on Monday the 28th prior to earnings as a negative surprise after the close could lead to a gap down in the morning following.

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