What Options Traders Expect from Amgen, Inc. (AMGN) Earnings

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Biotech giant Amgen, Inc. (NASDAQ:AMGN) reports earnings Wednesday night. Let’s take a look at recent announcements for AMGN, the price chart of AMGN stock and what, if anything, the options market is suggesting for bulls, bears and more neutral traders.

What Options Traders Expect from Amgen, Inc. (AMGN) Earnings

AMGN Stock Earnings Picture

Ahead of Amgen’s first-quarter earnings release analysts are forecasting profits of $2.98 per share. Range estimates are from $2.72 to $3.19 per share of AMGN stock.

Street expectations imply a very modest increase in profits from the year ago period and mixed results over the last three quarters. Sequentially and compared to Q4, AMGN earnings are expected to rise by 9 cents.

While earnings growth appears rather uninteresting, the whisper forecast is calling for stronger profits of $3.09. The more critical expectation could influence how investors react to Amgen stock following its earnings release.

On the sales side, AMGN stock’s revenues are expected to dip by $400 million from last quarter’s better-than-forecast sales of $6 billion. This follows three straight quarters of increases and puts revenues narrowly above last year’s same quarter result of $5.5 billion.

Beyond the top- and bottom-line numbers, investors will be keying off two drugs of importance to Amgen; its blockbuster arthritis treatment Enbrel and the promising, but expensive Repatha therapy used to combat cholesterol.

Enbrel is finding increased competition, while Repatha has been a disappointing profit center for Amgen. Regarding the latter, investors are hoping Repatha might find new life as a potential alternative to expensive statin treatments for heart attack and stroke victims.

Analyst Community

Wall Street is mostly neutral-to-bullish on AMGN stock. Among 26 polled analysts, a full 50% have hold recommendations, two firms have outperform ratings and 11 rate shares a buy.

Amgen’s forecast is a bit more optimistic. Compared to a current price of $164, the low estimate is $163, while the median forecast is for $187 and the range high calls for $212 over the next 12 months.

Amgen Stock Short-Term Trading Record

AMGN stock has established a consistent pattern of beating Street profit views. In fact, over the last 12 quarters the company has topped forecasts 100% of the time. Investor reaction responsible for that other bottom-line on the AMGN stock price chart however, has been much more checkered.

Working backwards the past several quarters, shares of AMGN have moved 4.98%, -9.58% 0.35%, -1.41%, 2.95% and -1.28% on a close-to-close basis.

The net reaction in Amgen stock has produced an average loss of -0.66% with variability of 5% based on a one standard deviation reading. Combining the two metrics and the recent price history has resulted in an estimated range of -5.66% to 4.34%.

AMGN’s seven-day stock performance tracks similarly but with a bit more oomph. An average loss of -2.09% for the period coupled with variability of 7.3% yields an estimated range of -9.39% to 5.21%.

AMGN Stock Daily Chart

Source: Charts by TradingView

As the daily chart depicts, it has been a bit of a technically bumpy ride for AMGN stock investors the past couple years, but one which nonetheless has reaffirmed a bullish uptrend.

After gapping lower from a fresh relative high early last month, shares of Amgen have managed to hold, albeit in a loose manner, and confirm a higher low pattern off the long-term 200-day simple moving average.

Technically, the benefit of the doubt stands with the bulls as today’s price action fills last quarter’s upside earnings gap. From current levels the expectation is for a reaction through the 50-day simple moving average and a move to fill last month’s bearish gap prior to fresh highs for AMGN stock.

AMGN Stock Options Pricing

Behind the scenes, implied and underlying volatility have widened over the past month. The price consolidation of the past few weeks has been enough to register new multiyear lows in Amgen stock volatility.

At the same time, implied or option pricing in AMGN’s one-month call and put contracts have been pressured marginally, but unsurprisingly have not followed suite in front of the earnings event. Currently, premiums are trading roughly midway within Amgen’s 52-week IV range from 15% to 30%.

Looking a bit closer at prices and with shares at $164.90, the at-the-money April $165 straddle market points to a 68% chance AMGN will remain within an approximate price range of $159.50 to $170.30 into Friday’s expiration. The math behind this calculation is based on implied volatility of 36% with three trading sessions remaining.

Regarding the earnings move, the April contract is the purest play on AMGN stock, as there’s less opportunity for the reaction by traders to be impacted by broader market noise. In turn, people positioning in those same calls and puts live and die by the immediate reaction to the report.

The dollar move up or down works out to expected wiggle room of about +/-3.3% in Amgen by Friday’s close. In weighing both recent one and seven-day reactions, options traders are currently pricing in a volatile, but mostly normal, earnings reaction in AMGN stock.

Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.

The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2017/04/amgen-inc-amgn-stock-earnings/.

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