Amgen, Incyte Well Positioned Following Brexit

Despite the recent weakening of the GBP and EUR against the USD, there is limited impact to the 2Q-4Q 2016 figures, and most biotech companies under coverage exhibit a negative effect of less than 1 percent, Goldman Sachs’ Terence Flynn said in a report.

The NBI is down 26 percent, versus a 1 percent decline in the S&P 500. Analyst Terence Flynn believes that for the biotech group to outperform again, the following would need to fall into place:

1. Improved visibility into US drug pricing dynamics
2. Acceleration in product cycles
3. Pipelines beginning to deliver
4. Continued M&As at premium valuations

Related Link: Credit Suisse Leaves AbbVie Management Meeting Feeling Optimistic

Amgen: Well Positioned

Flynn has a Buy rating on Amgen, Inc. AMGN and believes that the company is well positioned since it has lower ex-US exposure [only 21 percent of revenues] relative to other large cap companies. Moreover, its valuation is undemanding and it has a growing dividend and upcoming pipeline catalysts, including AMG-334 Ph3 migraine data and Repatha IVUS data.

Incyte: Remains Attractive

The analyst has a Buy rating on Incyte Corporation INCY, saying that the company remains attractive in the current environment.

Incyte has limited FX exposure, with 89 percent of revenues being generated in the US. The commercial business is worth $59 per share, and upcoming catalysts in 2H are IDO, FGFR and BRD data, Flynn added.