Blue chip biotech

Amgen’s (Nasdaq: AMGN) shares have been trading near where they were a year ago, presenting a buying opportunity for long-term investors interested in the potential of biotechnology. Its price-to-earnings (P/E) ratio has been in the mid-teens, which is on the low side for a blue chip biotech company — especially one that recently sported a juicy dividend yield near 3%.

What’s keeping investors at bay? Amgen is going through a radical makeover. Its newer growth products — such as the migraine treatment Aimovig and cholesterol-lowering drug Repatha — haven’t been able to fully offset declining sales of the biotech’s portfolio of aging superstars. Amgen’s top line, in fact, is forecast to dip by 3.9% in 2019. Another area of concern is Amgen’s oncology portfolio. Some of the company’s most important early-stage cancer assets simply haven’t lived up to expectations.

Still, there are solid reasons to consider buying Amgen now. First, its recent acquisition of the psoriasis medicine Otezla is expected to immediately boost earnings and quarterly sales. The company should, in fact, return to top-line growth by next year. Amgen also has one of the largest cash positions in its industry, so there’s a good chance it will pursue more acquisitions to spur more growth.

Amgen is well-equipped to get through its headwinds, so consider learning more about it before the rest of Wall Street wakes up. (The Motley Fool has recommended Amgen.)