Amgen – Amgen Stock Slips After Earnings Report, 2021 Outlook Is Flat
‘s results came in just about as expected for its December quarter, with the biotech company reporting Tuesday that it achieved a modest rise in both sales and earnings. Revenue rose 7% to $6.6 billion in the quarter, while earnings rose 3% to $2.2 billion, or $3.81 a share, excluding restructuring and noncash charges.
Investors responded to news with little enthusiasm, and
stock (ticker: AMGN) slipped 2% after Tuesday’s close, to $235. In the trading day before the announcement, the stock ticked up a few cents to close at $240.49, as the
index rose 1.6%.
Revenue in 2020 was challenged by Covid-19’s health-care disruption, and by the challenge of biosimilar competition for Amgen’s established blood cell boosters like Neupogen and Epogen. Still, the company grew 2020 sales by 9% to $25.4 billion, with earnings growth of 8% to $9.8 billion, or $16.60 a share, excluding certain charges. By conventional accounting, the year’s earnings fell 7% to $7.3 billion, or $12.31 a share. The results were in line with expectations.
For 2021, Amgen expects sales of between $25.8 billion and $26.6 billion, with earnings between $16 and $17 a share (excluding certain charges). It plans to continue returning cash to shareholders, at levels similar to 2020, when the company paid out $3.8 billion in dividends and bought back $3.5 billion worth of stock.
Products that grew in the December quarter included the heart drug Repatha, and the biosimilars that Amgen has launched in Europe against the products of its biotech rivals. Amgevita is Amgen’s version of the
(ABBV) bestseller Humira, and the Amgen product grew its sales by 45% in the quarter, to top $100 million.
Nearing the mouth of Amgen’s product pipeline is sotorasib, a first-of-its-kind cancer drug that targets a tumor-fueling mutation called KRAS. Last week, researchers presented results from a lung-cancer trial that Amgen hopes will serve to get the drug approved by the Food and Drug Administration. The drug’s ability to safely stall tumor growth for at least half a yea, should satisfy the FDA, said William Blair analyst Matt Phipps. Doctors think sotorasib will find much of its use in combination with other cancer-targeting drugs, and Amgen is sponsoring 10 different trials of the drug in combination treatments.
Phipps rates Amgen stock a Market Perform. The stock trades at 14.5 times his forecast for $16.73 in 2021 per-share earnings, which he says isn’t a stingy multiple, in light of the decline in sales of Amgen’s legacy products.
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