Barclays Says Acceleration For Amgen Could Be A Challenge

Amgen, Inc. AMGN reported robust 2Q results on both the top and bottom lines, modestly beating expectations.

Barclays’ Geoff Meacham maintained an Equal-Weight rating on the company, with a price target of $185.

Further Acceleration Could Be Challenging

“While we have fairly high conviction that the upper end of raised 2016 guidance can be achieved, we would note that 1H16 revenue growth has largely been reliant upon price vs. unit growth, which was essentially flat,” Meacham mentioned.

Although the operational execution for 2Q was good, the analyst believes further acceleration could be challenging.

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Meacham expects additional Aranesp conversion, Repatha and Erenumab to be positive drivers in 2017, although there could also be a larger risk of the Enbrel, G-CSF and Epogen franchises seeing continued volume declines.

Catalysts Priced In

“While we acknowledge that investors may favor Amgen shares over the near term given good execution and the continued "safety" trade, we believe that a material re-rating from current levels is unlikely given that upcoming clinical and regulatory catalysts are largely priced in at this point, in our view,” the analyst stated.

Positive Updates Likely

At the same time, Meacham expects positive pipeline updates in 2H16, including the Phase 3 Erenumab episodic migraine data, which is expected to be positive.

The Repatha imaging data is also likely to provide additional support to the profile, although increased commercial uptake would be contingent on the CV outcomes data, expected in 1Q17, the analyst cautioned.

“We anticipate a positive FDA decision on ABP 501 in 3Q16 but assume patent litigation delays a launch absent favorable rulings from the USPTO,” Meacham said.

Amgen has raised its 2016 revenue guidance, as well as its EPS guidance range.

Full ratings data available on Benzinga Pro.