Amgen Shares Consolidating Ahead Of More Gains?

Amgen, Inc. AMGN shares have been a blessing for the bulls in 2014. There have been only a few one- to two-week periods where any worry or frustration might have entered investors' minds. In that regard, Amgen has a reflection of the bullish biotechnology sector as a whole. However, Amgen is one of the go-to big caps in the biotech space.

So, how much longer can Amgen investors continue to sleep easy?

What The Bulls See

• 24.74 percent net profit margins that spin off over $6.25 billion in levered free cash flow annually.
• A healthy ratio of 4.22.
• A dividend of 1.5 percent with only a 36 percent dividend payout ratio.
• Some cheap valuation metrics: An enterprise value of $128 billion that trumps the market capitalization of $123 billion.

What The Bears See

• A debt-to-equity ratio of 130.23 percent.
• Some expensive valuation metrics: A price-to-book ratio of 4.86, a price-to-sales ratio of 6.24 and a PE of just under 19, which is expensive compared to estimated 2015 growth in revenues and EPS of 4.4 percent and 8 percent, respectively.

The Technical Take

Technicians note that Amgen seems to have peaked out short-term at the $164.65 level on October 31. Since then, they feel the stock is in a consolidation pattern that in the best-case scenario should bottom out at $156.76 and at worst may take the stock down to the uptrend line support at around $151.75.

Below that, things turn less bullish and no additional support comes in until $148.20. On the upside, assuming one of the two initial support levels holds up, Amgen could make a run up to around $185, the upper edge of the new uptrend channel.