Amgen – What’s in the Cards for Amgen (AMGN) This Earnings Season?
Amgen, Inc. AMGN will report fourth-quarter and full-year 2020 results on Feb 2, after market close. In the last reported quarter, the company delivered an earnings surprise of 16.53%.
The large biotech’s performance has been pretty impressive, with earnings beating estimates in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 11.65%, on average.
Amgen Inc. price and EPS Surprise
Amgen Inc. price-eps-surprise | Amgen Inc. Quote
Amgen’s stock has risen 11.7% in the past year, compared with an increase of 16.3% for the industry.
Factors to Consider
In the fourth quarter, the recovery from the peak impact of the COVID-19 pandemic is expected to have continued. The recovery started in the third quarter as physician interaction and prescription trends of several drugs like Prolia and Xgeva improved sequentially. However, the resurgence in COVID-19 infection rates is likely to have acted as a headwind this time around.
Volumes of Prolia improved in the third quarter as patients returned to treatment after sales were hurt by fewer patient visits in the second quarter as Prolia treats the most at-risk COVID-19 patients
Please note that COVID-19 has caused a change in historical quarterly trends for Prolia. Prolia witnesses higher revenues in the second and the fourth quarters of a year due to its six-month dosing regimen. Given the negative impact of the pandemic in the second quarter and the six-month dosing regimen of Prolia, year-over year growth rates in the fourth quarter are expected to have been lower than pre-COVID growth trends. Also, the recent increase in infection rates could have resulted in a delay in Prolia treatments and might have hurt sales of the drug in the fourth quarter.
Fewer new patient starts amid COVID-19 is expected to have hurt sales of Kyprolis. Anticipation of changes in reimbursement rules for Parsabiv are expected to have hurt sales of the drug in the fourth quarter.
Higher volumes may have benefited sales of Blincyto, Nplate, Repatha, Otezla and Aimovig. Please note that Otezla was purchased by Amgen from Celgene in November 2019 as the latter had to divest the drug in order to complete its merger with Bristol-Myers BMY. The Zacks Consensus Estimate for Otezla is $583 million.
Meanwhile, sales of new drug Evenity are expected to have been soft in the fourth quarter due to lower sales in Japan due to inventory drawdown by partner Astellas, following large purchases in the first half.
The respective Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Parsabiv, Repatha and Kyprolis sales is pegged at $733 million, $507 million, $91 million, $187 million, $221 million and $275 million.
Also, increasing branded and generic competition for its legacy products like Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar are likely to have hurt the top line.
Biosimilars may have once again been an important contributor to top-line growth driven by the share gains of oncology biosimilars, Kanjinti (Amgen’s biosimilar of Roche’s RHHBY Herceptin) and Mvasi (biosimilar of Roche’s Avastin). However, it remains to be seen if increasing competitive pressure on Kanjinti and Mvasi because of the launch of competing biosimilar products has had an impact on fourth-quarter sales. Meanwhile, in December, the FDA approved Amgen’s Riabni, a biosimilar to Roche’s Rituxan.
Operating expenses are expected to have increased 20% sequentially in the fourth quarter as customer-facing commercial activity levels increase and pipeline activities have started recovering from COVID-19 related slowdowns.
Our proven model does not conclusively predict an earnings beat for Amgen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Amgen’s Earnings ESP is -0.85% as the Zacks Consensus Estimate is pegged at $3.37 and the Most Accurate Estimate is lower at $3.34. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Amgen has a Zacks Rank #3.
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