AMGN should be good for $14/share so $173.70 is a good deal (p/e 12). They appear to earn less because they repatriated last year and took a big tax hit but the cash is in the bank ($40Bn).
| Year End 31st Dec | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | TTM | 2018E | 2019E | CAGR / Avg | |
| $m | 17,265 | 18,676 | 20,063 | 21,662 | 22,991 | 22,849 | 22,939 | 22,696 | 22,609 | +5.8% | |
| $m | 5,577 | 5,867 | 6,191 | 8,470 | 9,794 | 9,973 | 10,108 | +12.3% | |||
| $m | 4,345 | 5,081 | 5,158 | 6,939 | 7,722 | 1,979 | 2,219 | 9,384 | 9,413 | -14.6% | |
| $ | 5.61 | 6.64 | 6.70 | 9.06 | 10.2 | 11.0 | 11.6 | +14.4% | |||
| $ | 5.87 | 7.02 | 7.15 | 9.13 | 10.2 | 11.4 | 11.6 | 13.7 | 14.1 | +14.2% | |
| % | +19.8 | +19.5 | +1.9 | +27.7 | +12.1 | +11.5 | +9.9 | +19.8 | +3.47 | ||
| x | 15.4 | 15.2 | 12.9 | 12.4 | |||||||
| x | 0.78 | 0.77 | 3.71 | 3.06 | |||||||
| Profitability | |||||||||||
So those $9Bn estimates are realistic expectations for this $115Bn company and that's a real bargain in Biotech land. We'll see how earnings go but let's set up a small position for the LTP – just in case it pops and we miss it:
- Sell 5 AMGN 2020 $160 puts for $15.50 ($7,750)
- Buy 15 AMGN 2020 $175 calls for $20 ($30,000)
- Sell 15 AMGN 2020 $200 calls for $11 ($16,500)
That's net $5,750 on the $37,500 spread so $31,750 profit potential at $200 and we're aggressively high as they might miss and then we'll spend about $7,500 more to roll the calls down $10 and widen the spread by $15,000. Either way, we'll be able to sell 5 short calls and, at the moment, the July $180s are $3 so $1,500 for 66 out of 612 days means we can collect about $12,000 in premiums while we wait. Not selling short calls yet as I think they are priced too low into earnings.
