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Amgen (AMGN) to Report Q2 Earnings: What's in the Cards?
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Biotech major Amgen Inc. (AMGN - Free Report) will report second-quarter 2017 results on Jul 25 after the market closes. Amgen delivered a positive earnings surprise of 5.0% in the last quarter.
Amgen shares are up 22.6% so far this year. This compares favorably with the 10.5% increase registered by the industry during this period.
Amgen’s performance has been pretty impressive, with the company reporting positive surprises consistently. The average earnings beat over the last four quarters is 5.31%.
Let’s see how things are shaping up for the company this quarter.
Factors at Play
Amgen’s growth products like Prolia, Xgeva, Kyprolis, Vectibix, Nplate, Sensipar are likely to perform well. While new patient adoption and repeat injections might drive Prolia sales, Xgeva is likely to benefit from its superior clinical profile versus competition. Parsabiv (etelcalcetide), for the treatment of secondary hyperparathyroidism (SHPT), was approved in the U.S in Feb 2017 and in EU in Nov 2016. The drug is likely bring in some revenues in the second quarter.
However, the company has some challenges in store given the presence of biosimilar competition and slowdown in sales of mature products. Epogen, Neulasta and Neupogen sales are expected to be hurt by competition in the EU. Note that Neupogen sales are also being hurt by biosimilar competition in the U.S. mainly from Zarxio, Sandoz’s, Novartis AG’s (NVS - Free Report) generic arm, biosimilar version of Neupogen, which was launched in the U.S. in Sep 2015. Neupogen is expected to face continued competitive pressure this year from the existing and potential biosimilars.
Neulasta and Epogen could start facing biosimilar competition in the U.S. this year, though no biosimilars were launched in the second quarter.
Meanwhile, blockbuster drug Enbrel is facing increasing competition in the rheumatology/dermatology segments, which will hurt sales.
Volume growth of recently launched products may not be enough to offset the decline in mature brands
The bottom line will however benefit from the company’s overall cost-cutting efforts and share buyback. The company’s restructuring plan will make it leaner and more cost efficient.
Investor focus will remain on the performance of the company’s PCSK9 inhibitor, Repatha. Uptake of Repatha, which gained FDA approval in Aug 2015, has not been very encouraging so far due to pricing and re-imbursement issues/payer restrictions.
A phase III cardiovascular outcomes study (FOURIER) on Repatha had revealed significant reduction in myocardial infarctions and strokes in the first quarter. The data is key to the commercial success of Repatha as it would broaden the use of the drug. Though data from the study looks good, it is not very clear if payers will be willing to improve access to Repatha based on this data. Amgen filed regulatory applications in both the U.S. and EU to include FOURIER data on Repatha’s label in Jun 2017.
Earnings Whispers
Our proven model does not conclusively show that Amgen is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Its Earnings ESP is -0.32% as the Most Accurate estimate stands at $3.08 while the Zacks Consensus Estimate is pegged higher at $3.09. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Amgen’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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Image: Bigstock
Amgen (AMGN) to Report Q2 Earnings: What's in the Cards?
Biotech major Amgen Inc. (AMGN - Free Report) will report second-quarter 2017 results on Jul 25 after the market closes. Amgen delivered a positive earnings surprise of 5.0% in the last quarter.
Amgen shares are up 22.6% so far this year. This compares favorably with the 10.5% increase registered by the industry during this period.
Amgen’s performance has been pretty impressive, with the company reporting positive surprises consistently. The average earnings beat over the last four quarters is 5.31%.
Let’s see how things are shaping up for the company this quarter.
Factors at Play
Amgen’s growth products like Prolia, Xgeva, Kyprolis, Vectibix, Nplate, Sensipar are likely to perform well. While new patient adoption and repeat injections might drive Prolia sales, Xgeva is likely to benefit from its superior clinical profile versus competition. Parsabiv (etelcalcetide), for the treatment of secondary hyperparathyroidism (SHPT), was approved in the U.S in Feb 2017 and in EU in Nov 2016. The drug is likely bring in some revenues in the second quarter.
However, the company has some challenges in store given the presence of biosimilar competition and slowdown in sales of mature products. Epogen, Neulasta and Neupogen sales are expected to be hurt by competition in the EU. Note that Neupogen sales are also being hurt by biosimilar competition in the U.S. mainly from Zarxio, Sandoz’s, Novartis AG’s (NVS - Free Report) generic arm, biosimilar version of Neupogen, which was launched in the U.S. in Sep 2015. Neupogen is expected to face continued competitive pressure this year from the existing and potential biosimilars.
Neulasta and Epogen could start facing biosimilar competition in the U.S. this year, though no biosimilars were launched in the second quarter.
Meanwhile, blockbuster drug Enbrel is facing increasing competition in the rheumatology/dermatology segments, which will hurt sales.
Volume growth of recently launched products may not be enough to offset the decline in mature brands
The bottom line will however benefit from the company’s overall cost-cutting efforts and share buyback. The company’s restructuring plan will make it leaner and more cost efficient.
Investor focus will remain on the performance of the company’s PCSK9 inhibitor, Repatha. Uptake of Repatha, which gained FDA approval in Aug 2015, has not been very encouraging so far due to pricing and re-imbursement issues/payer restrictions.
A phase III cardiovascular outcomes study (FOURIER) on Repatha had revealed significant reduction in myocardial infarctions and strokes in the first quarter. The data is key to the commercial success of Repatha as it would broaden the use of the drug. Though data from the study looks good, it is not very clear if payers will be willing to improve access to Repatha based on this data. Amgen filed regulatory applications in both the U.S. and EU to include FOURIER data on Repatha’s label in Jun 2017.
Earnings Whispers
Our proven model does not conclusively show that Amgen is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Its Earnings ESP is -0.32% as the Most Accurate estimate stands at $3.08 while the Zacks Consensus Estimate is pegged higher at $3.09. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Amgen’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Amgen Inc. Price and EPS Surprise
Amgen Inc. Price and EPS Surprise | Amgen Inc. Quote
Stocks to Consider
Some stocks in the Biomed/Genetics sector that have both a positive ESP and a favorable Zacks Rank are:
Celgene Corporation with an Earnings ESP of +0.62% and a Zacks Rank #3. The company is scheduled to release results on Jul 27.
Scheduled to release results on Jul 26, Gilead Sciences, Inc. (GILD - Free Report) has an Earnings ESP of +3.32% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>