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Amgen Earnings Preview: Strong Earnings Growth Expected

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Amgen (NYSE: AMGN), shares of which reached a multiyear high Monday, is scheduled to report its first-quarter 2013 results Tuesday, April 23, after the markets close.

Investors will be keeping an eye on the impact that a recent German regulatory review of drug prices may have on the company over the long term. The company also will discuss the preliminary results in a late-stage study of TVEC, its experimental drug for the treatment of melanoma, as well as update progress on other drugs currently in patient testing.

Expectations

Analysts on average predict that Amgen will report revenue for the quarter that totaled $4.37 billion, which would be about eight percent higher than in the year-ago quarter. Earnings of $1.84 per share are also in the consensus forecast. That would be up from a reported profit of $1.61 per share in the comparable period of last year.

Note that the consensus earnings per share (EPS) estimate has ticked up in the past 60 days from $1.82. Also, analysts on average have underestimated Amgen's EPS in the past four quarters. Back in the fourth quarter, EPS beat expectations by only two cents per share though.

Fourth-quarter results were attributed in part to strong sales of its ENBRL, Sensipar/Mimpara and Vectibix and Nplate brands The CEO said, "We enter 2013 with good momentum, a broad late-stage pipeline and a continued focus on building our business internationally." The share price pulled back fractionally immediately following the fourth-quarter report.

Looking ahead to the current quarter, the forecast currently calls for a sequential and year-over-year decline in earnings to $1.76 per share. That EPS estimate has not changed in the past 30 days. And revenue for the quarter is expected to be essentially flat, relative to a year ago, at $ 4.52 billion. But full-year revenue is so far expected to be up by more than four percent.

The Company

Amgen engages in the discovery, development, manufacture and marketing of human therapeutic products in the areas of supportive cancer care, inflammation, nephrology and bone diseases, primarily in the North America and Europe. Its successful biopharmaceutical products include Epogen and Neupogen.

The company was founded in 1980 and its headquarters are in Thousand Oaks, California. Amgen is a component of the S&P 500, and it now has a market capitalization of about $83.8 billion. Robert A. Bradway became chairman of the board this past January, and he has been chief executive officer since May 2012.

Competitors include Celegene (NASDAQ: CELG) and Teva Pharmaceuticals (NYSE: TEVA). The former is expected to post double-digit percentage growth of both EPS and revenue when it reports later this week. The latter is expected to report declines in EPS and revenue for its most recent quarter.

During the three months that ended in March, Amgen made a deal with Bind to develop cancer drugs, abandoned trials of a fracture-healing drug, saw the Supreme Court rule against it in a class-action suit, declared a quarterly dividend and said a melanoma drug showed promise in a key trial.

Performance

Amgen has a long-term earnings per share growth forecast of more than nine percent but a price-to-earnings (P/E) ratio that is greater than the industry average. Its operating margin also is better than the industry average, and it has a return on equity of almost 23 percent. The dividend yield is near 1.7 percent.

The number of Amgen shares sold short, as of the March 28 settlement date, represents less than two percent of the float. The short interest has been falling since the end of January and has reached its lowest level in at least a year. But days to cover remains more than two.

The consensus recommendation of analysts surveyed by Thomson/First Call who follow the stock has been to hold shares for the past three months. Twelve of the 27 analysts recommend buying shares, but just one recommends selling. The share price has overrun the analysts' mean price target, or where they expect the stock to go. But a positive earnings surprise or rosy guidance could prompt hikes in analysts' target prices.

The share price is about 25 percent higher since the beginning of the year and reached a multiyear high this morning. It is well above the 50-day and 200-day moving averages. Over the past six months, Amgen has outperformed Teva Pharmaceuticals and the broader markets but underperformed Celgene.

Posted-In: amgen Celgene TEVA PHARMACEUTICALSEarnings Long Ideas Short Ideas Previews Trading Ideas Best of Benzinga

 

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