Shares of Amgen (AMGN) shot higher yesterday following its solid earnings report–and its financials were solid enough for Nomura’s M. Ian Somaiya to upgrade its shares to Buy from Neutral. He explains why:
Reuters Our upgrade is based on our view that Amgen has significantly improved its longer-term outlook following additional cost-cutting measures which should support a nearly 15 point improvement in operating margins by 2018E and drive double-digit EPS growth. However, the key to our upgrade is the ability of the company's biosimilar portfolio to offset erosion of its base business, enabling its pipeline to drive growth beyond 2018.
Somaiya also calls Amgen, which trades at 17.5 times forward earnings, “too cheap to ignore.” Shares of Amgen have gained 0.8% to $158.51 at 3:25 p.m. today
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