Amgen, Inc. (AMGN), Onyx Pharmaceuticals, Inc. (ONXX): Is This Biopharmaceutical Stock Still a Buy?

For the full year 2013, Celgene expected to grow its revenue by nearly 11% to $6 billion, while REVLIMID sales expected to increase by 10% to the range of $4.1 to $4.2 billion. Its adjusted diluted EPS iss estimated to come in at $5.55 to $5.65 per share, 14% higher than the adjusted diluted EPS in 2012.

What investors like about Celgene is its consistent share buybacks. In the first quarter 2013, the company has spent more than $400 million to buy back 4.2 million shares. Recently, Celgene authorized an additional share repurchase amount of $3 billion, in addition to the remaining $834 million under existing share buyback program. The total share repurchase would be more than $3.8 billion, representing a high potential yield at 7.7% for its shareholders.

My Foolish take

Onyx, despite quite an expensive price-to-sales ratio valuation, could get into the bidding war, which might push up its stock price even further. According to Barron’s, Michael King, JMP Securities analyst, “Onyx is in the hands of the arbs right now. Celgene remains a name for a fundamentalist.” He expected that Celgene might reach $148 per share in the next year, while Onyx could experience a nearly 10% rise to $144 per share.

Consequently, Onyx might be considered an opportunistic play on the potential future bidding between pharmaceuticals giants while Celgene and Amgen are better picks with their lower valuations, more established revenues and profits, and the potential to return more cash to shareholders with more dividends and increase share repurchases.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Celgene.

The article Is This Biopharmaceutical Stock Still a Buy? originally appeared on Fool.com and is written by Anh HOANG.

Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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