Amgen Stock Surging This Morning
Equities were hammered on Wednesday following news that Donald Trump won the U.S. presidency, but shares of Amgen, Inc. (NASDAQ:AMGN) stock are bucking that trend.
At the opening bell, shares of AMGN stock surged to $150.74, up nearly nine percent from the Tuesday close. The move was followed by broad-based gains into other biotech and pharma stocks, including Pfizer Inc. (NYSE:PFE), Mylan NV (NASDAQ:MYL), and Eli Lilly and Co (NYSE:LLY).
The presidential election cycle has been a brutal period for AMGN stock, which fell by some 20% leading up to election night. Analysts feared that a Hillary Clinton administration, which seemed like a sure thing as voters arrived to the polls, would strangle the pharmaceutical industry.
Clinton had vowed to crack down on industry practices, issuing new regulations, limiting drug approvals, and reducing the ability of companies to increase drug prices. That concern dimmed investor interest for biotech stocks, in what had previously been a golden age for the industry.
“I believe that our pharmaceutical and biotech industries can be an incredible source of American innovation, giving us revolutionary treatments for debilitating diseases,” Clinton said in a statement last August. “But it’s wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them.”
In contrast, President-elect Donald Trump has talked little about the issue of drug prices. His campaign was focused on limiting the regulations on business during the race for the White House, and he has not made an issue of drug prices.
A Trump presidency could also result in a special dividend for AMGN stockholders. Today, the biotech giant has billions of dollars in cash held by foreign subsidiaries overseas. Because of the structure of the U.S. tax code, Amgen would have to pay billions of dollars in taxes if it were to repatriate that cash back to the parent company in the United States.
Donald Trump has proposed a tax holiday for American companies, imposing a one-time tax on the existing foreign profits earned overseas. If the new administration were to follow through with such a plan, Amgen would save billions of dollars in taxes. The repatriated cash could then be used to fund dividends, stock buybacks, mergers, and acquisitions.
Investors will be looking for more details in Donald Trump’s tax plan in the weeks ahead. Regardless of the specifics, a major cloud has been lifted over the biotech industry and AMGN stock.