J.P. Morgan Raises Target On Amgen To $70

According to J.P. Morgan, Amgen AMGN target is raised to $70. J.P. Morgan said that Amgen's fundamentals are balanced by two primary issues: upside potential from Prolia/Xgeva (dmab) and downside risk from the anemia (ESA) franchise. “These two issues drive sentiment on AMGN shares and at this point the fears of further declines in Amgen's anemia business far outweigh any hopes of dmab upside. After q/q declines of -4% (4Q10) and -9% (1Q11), Street models for the anemia franchise assume q/q growth for 2Q to 4Q11 of +3%, 0% and 0%, respectively. This is consistent with Amgen's commentary about stability in 2H11, assuming no material ESA label changes or reimbursement changes by CMS. We think an era of “ESA stability” is approaching, partly driven by beatable Street expectations and partly driven by what we think will be modest if any changes to ESA labeling or reimbursement (NCD deadline: June 16). If this is the case, the Street may shift focus to dmab upside and strong demand currently for Xgeva among urologists and prostate cancer specialists. Next week's AUA meeting may provide tangible evidence of a clinically meaningful result from Xgeva in bone met prevention in Study '147. Overall, we think the risk/reward on AMGN shares going into 2H11 is favorable driven by a stabilizing anemia franchise and dmab upside (we're ~6% ahead of the 2011 consensus). As a result, we're moving our PT to $70 (from $65) based on a higher multiple that reflects a lower risk profile.” Amgen closed yesterday at $59.66.