AMGN a Victim of Investor Sentiment

I talked up shares of Amgen (AMGN) in a recent edition of my free weekly newsletter, What’s Working on Wall Street Now, in anticipation of a strong quarterly report. Well I got it right on the earnings. But it appears that Wall Street is overlooking those numbers and selling off shares.

Here are the details: Amgen released extremely strong earnings last week, including a 17% earnings surprise, a small sales surprise and higher guidance for the full fiscal year. Very nice numbers for any stock. Unfortunately, Wall Street got word that additional tests would be needed on Amgen’s experimental drug Prolia, a treatment for cancer therapy-induced osteoporosis. This has caused a lot of negative sentiment about AMGN’s future growth potential and fears that the company’s drug pipeline may not be promising after all. So amid the uncertainty, Wall Street dumped shares of Amgen.

To be honest, there is nothing wrong with AMGN’s fundamentals. If you look at my in-depth Portfolio Grader stock report for Amgen, you’ll see that this pick gets all A’s and B’s for its eight fundamental grades. However, the stock gets an F for its quantitative grade–a measure of how popular shares are with investors. That’s not good. The bottom line is that it doesn’t matter how great a company is if nobody wants to buy its stock. And that’s unfortunately the case for AMGN right now.

Amgen could very well bounce back and become a great buy down the road, since it has the fundamentals necessary for big growth. But as long as Wall Street sees this stock as a bad investment, shares will be punished as a result. As of this week, the stock ranks a D grade or "sell" in my Portfolio Grader stock ranking tool. That means you’re better off investing in another company for now.

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