Wall St. is back in love with Amgen on bone-drug hopes

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There should be plenty of joy in Thousand Oaks this morning.

Shares of biotech giant Amgen Inc., the city’s best-known employer, have soared to their highest level in 14 months after the company on Friday reported positive trial results for its potential blockbuster drug to treat the bone-thinning disorder osteoporosis.

Wall Street, which had hammered Amgen’s shares for the last three years on fears the firm had lost its status as a growth company, suddenly is taking a much sunnier view of the future -- despite what’s expected to be a lousy second-quarter earnings report after the closing bell today.

The stock was trading at $60.10 at about 11:45 a.m. PDT, up $6.18, or 11.5%, from Friday.

In a three-year study involving 7,800 women, Amgen said its experimental drug denosumab, or D-mab, ‘significantly’ reduced spine and hip fractures. Although the company didn’t release specifics, it said it was pleased with the safety results of the trial as well. Full results of the study are expected in September.

With sales of its lucrative anti-anemia drugs Aranesp and Epogen tumbling because of health risks now associated with the treatments, Amgen has needed a new wonder drug to revive investors’ interest.

D-mab could be it. The drug could be approved for post-menopausal osteoporosis in 2009 and could rack up sales of at least $1 billion in 2010, analyst Bret Holley at Oppenheimer & Co. said in a report today. The company’s total sales in 2007: $14.8 billion.

Analysts are falling over themselves to raise earnings estimates for the company and price targets for the stock. Goldman Sachs & Co. now expects Amgen’s earnings to rise at a 13% average annualized rate from 2009 to 2012. The brokerage, which had previously forecast no net growth in 2009-12, also raised its 12-month price target for the shares to $74 from $63.

Morgan Stanley, Jefferies & Co. and Thomas Weisel Partners raised their ratings on the stock to ‘buy’ from ‘hold.’

If only they had piled on a few months ago: Even before today’s surge, Amgen’s shares had been rebounding after hitting a five-year low of just under $40 in mid-March.

Despite the problems with its anemia drugs, Amgen still is expected to earn at least $4 a share this year. So at the stock’s low in March it was selling for a price-to-earnings ratio of just 10.