Amgen Follows Up Positive Clinical News With Earnings Beat; Jefferies Sees 24% Upside

Amgen, Inc. AMGN reported a beat EPS for Q4:16, driven by higher product sales that more than offset the higher opex.

Jefferies’ Eun K. Yang maintains a Buy rating on the company, while lowering the price target from $198 to $194.

Amgen, however, guided for flat to a 3 percent decline in total revenue for FY 2017, with 1–8 percent year-on-year EPS growth, attributing the guidance to competition, FX and limited net selling price yield.

Key To Share Appreciation

Following the positive cardiovascular outcomes for Repatha, Yang believes that the magnitude of cardiovascular risk reduction would be key to share-price appreciation.

Investors are hoping for 25–30 percent relative risk reduction. The data from the Repatha study is expected in March.

So far, “AMGN reported FOURIER cardiovascular outcomes trial (CVOT) of PCSK9i Repatha met primary composite endpoint of reduction in CV death, non-fatal myocardial infarction (MI), non-fatal stroke, hospitalization for unstable angina or coronary revascularization; and key secondary composite endpoint,” the analyst mentioned.

Apart from the composite endpoints, Yang believes individual endpoints, such as time to cardiovascular death, would be important for Repatha’s value proposition.

Q4 Results & Guidance

Amgen reported its Q4:16 EPS at $2.89, beating the estimate and the consensus, on higher product sales of $5.7 billion.

For FY 2017, the company guided to total revenue of $22.3 billion–$23.1 billion, representing flat to a decline of 3 percent year-on-year. The EPS guidance was for $11.80–$12.60.

At last check, shares of Amgen were up 4.41 percent at $166.62.