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New Post has been published on http://www.stockmarketsdaily.com/biotech-value-buys-amgen-nasdaqamgn-cambrex-nysecbm-biogen-idec-nasdaqbiib/7771/
Biotech Value Buys: Amgen (NASDAQ:AMGN), Cambrex (NYSE:CBM), Biogen Idec (NASDAQ:BIIB)
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Amgen Inc (NASDAQ:AMGN), Cambrex Corporation (NYSE:CBM), and Biogen Idec Inc (NASDAQ:BIIB) are 3 biotech companies getting a lot of attention at the moment. So we decided to assess which may provide the best value for investors to consider buying and which are over, under or fairly priced.
Rather than the usual Price to Earnings (P/E) multiple method, we feel the best way to assess which of Amgen (AMGN), Cambrex (CBM), Biogen Idec (BIIB) is the best value currently is to use the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the companies rather than merely the growth for one earnings period ahead as forward P/E does. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced.
Amgen (NASDAQ:AMGN) had a last closing stock price of $152.26 after moving -2.63% in trading with a trailing 12 month P/E multiple of 23.98 and an estimated forward P/E multiple of 16.40. Amgen (AMGN) has an estimated 5 year annual growth of 11.33% and a PEG multiple of 2.12. Based on the PEG ratio of AMGN being 2.12, we consider Amgen to likely be overpriced.
Cambrex (NYSE:CBM) had a last closing stock price of $22.43 after moving -1.92% in trading with a trailing 12 month P/E multiple of 17.80 and an estimated forward P/E multiple of 17.03. Cambrex (CBM) has an estimated 5 year annual growth of 21.00% and a PEG multiple of 0.85. Based on the PEG ratio of CBM being 0.85, we consider Cambrex to likely be underpriced.
Biogen Idec (NASDAQ:BIIB) had a last closing stock price of $389.16 after moving 10.17% in trading with a trailing 12 month P/E multiple of 36.82 and an estimated forward P/E multiple of 23.76. Biogen Idec (BIIB) has an estimated 5 year annual growth of 22.62% and a PEG multiple of 1.63. Based on the PEG ratio of BIIB being 1.63, we consider Biogen Idec to likely be at fair value.
Based on the above, it would appear that Cambrex offers the best value, as it has the lowest PEG ratio of 0.85, when compared to the other stocks. This makes it appear less expensive due to having a lower stock price against current earnings and predicted growth in those earnings in the coming 5 years.
However, on an individual stock basis, the analysis concludes that Amgen (NASDAQ:AMGN) is overpriced, Cambrex (NYSE:CBM) is underpriced and Biogen Idec (NASDAQ:BIIB) is at fair value.
