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Why Is Amgen (AMGN) Up 0.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Amgen (AMGN - Free Report) . Shares have added about 0.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amgen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amgen Q1 Earnings, Sales Miss on Low Prices
Amgen reported first-quarter 2021 earnings of $3.70 per share, which missed the Zacks Consensus Estimate of $4.00. Earnings declined 12% year over year due to lower revenues and share of partner BeiGene's net loss.
Total revenues of $5.90 billion missed the Zacks Consensus Estimate of $6.23 billion. Total revenues declined 4% year over year as lower net selling prices hurt sales of several drugs. Meanwhile, the COVID-19 pandemic continued to hurt patient visits and new patient starts, mainly in the months of January and February as infection rates surged in the United States and Europe.
However, the company did see improved demand trends in March, which continued in April. Meanwhile, the year-over-year comparison was negatively affected by 2% as the first quarter of 2020 had benefited from roughly $150 of favorable changes to estimated sales deductions, which did not get reflected in the results of the first quarter of 2021.
Historically, the first quarter represents the lowest product sales quarter of the year as U.S. patients work through deductibles, especially for products, including Enbrel, Otezla and Aimovig .
Total product revenues decreased 5% from the year-ago quarter to $5.89 billion (U.S.: $3.90 billion; ex-U.S.: $1.7 billion). Volumes rose 4% while net selling prices declined 7% due to increased discounting and rebates to maintain formulary access in increasingly competitive categories.
Other revenues of $309 million declined 15.7% year over year.
Performance of Key Drugs
Prolia revenues came in at $758 million, up 16% from the year-ago quarter driven by volume growth as new and repeat patient volumes continued to recover from the impact of the pandemic.
With most osteoporosis patients already receiving vaccinations and with diagnosis rates reaching almost 90% of pre-COVID-19 levels, Prolia sales are expected to continue to improve throughout 2021.
Xgeva delivered revenues of $468 million, down 3% from the year-ago quarter hurt by COVID-19 related lower demand in United States and lower pricing in Asia.
Kyprolis recorded sales of $251 million, down 10% year over year due to slower growth in the multiple myeloma segment as fewer patients initiated treatment amid the pandemic
Future growth of Kyprolis is expected to be supported by encouraging uptake for combination use of Kyprolis plus Darzalex and dexamethasone (based on CADOR study data).
Repatha generated revenues of $286 million, up 25% year over year, as higher volume was partially offset by unfavorable changes to estimated sales deductions and lower prices due to Amgen’s efforts to improve access and affordability for the product. Amgen expects further reduction in global net price of Repatha on a sequential basis.
Vectibix revenues came in at $191 million, down 5% year over year. Nplate sales rose 4% to $227 million. Blincyto sales increased 14% from the year-ago period to $107 million.
Parsabiv recorded sales of $79 million, down 55% due to volume declines following changes in reimbursement rules for the drug.
Aimovig recorded sales of $66 million in the quarter, down 7% year over year as volume growth was offset by lower net selling price, which was due to increased rebates to maintain patient access. Unfavorable changes to estimated sales deductions also hurt sales.
New osteoporosis drug, Evenity recorded sales of $107 million in the quarter compared with $90 million in the previous quarter driven by volume growth.
Sales of Otezla were $476 million in the quarter, down 1% as volume growth was offset by lower pricing and pandemic-related inventory stocking in the year-ago quarter. New-to-brand prescription volume remained flat as the pandemic is suppressing the diagnosis and treatment of psoriasis patients.
Biosimilar generated revenues of $570 million in the quarter driven by volume growth, which offset the impact of declines in net selling price. Sales of Kanjinti and Mvasi were $161 million and $294 million in the quarter, compared with $158 million and $280 million, respectively, in the previous quarter. Sales of Kanjinti improved sequentially as favorable changes to estimated sales deductions were offset by price declines due to increased competition. Amjevita sales were $106 million in the quarter, up 23% year over year as higher volumes were partially offset by lower net selling price.
Overall, for biosimilars, volume growth is expected to be partially offset by lower prices due to increased competition in 2021.
However, all the mature drugs like Enbrel, Aranesp, Epogen, Neupogen and Neulasta declined due to an array of branded and generic competitors. Enbrel revenues of $924 million declined 20% year over year due to favorable changes to estimated sales deductions in the prior year, lower volumes and price. The negative volume and net price trends are expected to continue in the future quarters.
Aranesp revenues declined 16% from the prior-year quarter to $355 million. Revenues of the other ESA, Epogen, declined 19% to $125 million. Neulasta revenues declined 21% from the year-ago period to $482 million. Neupogen recorded 48% decrease in sales to $34 million in the quarter. Sensipar/Mimpara revenues declined 81% to $23 million.
Operating Margins Decrease
Adjusted operating margin declined 270 basis points (bps) to 51.2%. Adjusted operating expenses rose 2% year over year in the quarter to $3.04 billion. SG&A spend decreased 5% to $1.23. R&D expenses rose 2% year over year to $944 million driven by higher spend on early-stage pipeline partially offset by lower spending on late-stage development program.
Adjusted tax rate was 13.6% for the quarter, a 0.6-point increase from the year-ago quarter.
Amgen repurchased 3.7 million shares worth $865 million in the quarter and has $5.5 billion remaining under its stock repurchase authorization.
2021 Guidance
Amgen maintained its revenue guidance for 2021 in the range of $25.8 billion-$26.6 billion and adjusted earnings per share guidance in the range of $16.00 to $17.00 per share.
Adjusted operating costs are expected to grow at a rate similar to 7% recorded in 2020 as the company invests in innovation, launch of new products and digitization efforts. While R&D costs are expected to increase, SG&A expenses are expected to decline. Operating margin is expected to be roughly 50% in 2021. Adjusted tax rate is expected in the range of 13.5% to 14.5% compared with the previous expectation of 13. Amgen expects net selling prices for its drugs to decline in the mid-single digit range in 2021.
Amgen plans to spend approximately $900 million for capital expenditures in 2021. The company expects to buy back shares in the range of $3 billion to $5 billion through the year (previously $3-$4 billion).
Q2 Outlook
In the second quarter, Amgen expects revenues to grow between 7% and 10% sequentially from the first quarter. Second-quarter revenues will be aided by higher other revenues due to recognition of revenues from the collaboration with Eli Lilly for the manufacture of COVID-19 antibodies.
Cost of sales is expected to increase as a percent of product sales reflecting the impact of the Lilly deal. Operating expenses are expected to increase in the mid-teens percentage range reflecting the impact of the Lilly deal.
The company expects continued business disruption from COVID-19 in the second quarter with a steady recovery in the second half supported by global vaccination.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Amgen has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Amgen has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Amgen (AMGN) Up 0.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Amgen (AMGN - Free Report) . Shares have added about 0.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amgen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amgen Q1 Earnings, Sales Miss on Low Prices
Amgen reported first-quarter 2021 earnings of $3.70 per share, which missed the Zacks Consensus Estimate of $4.00. Earnings declined 12% year over year due to lower revenues and share of partner BeiGene's net loss.
Total revenues of $5.90 billion missed the Zacks Consensus Estimate of $6.23 billion. Total revenues declined 4% year over year as lower net selling prices hurt sales of several drugs. Meanwhile, the COVID-19 pandemic continued to hurt patient visits and new patient starts, mainly in the months of January and February as infection rates surged in the United States and Europe.
However, the company did see improved demand trends in March, which continued in April. Meanwhile, the year-over-year comparison was negatively affected by 2% as the first quarter of 2020 had benefited from roughly $150 of favorable changes to estimated sales deductions, which did not get reflected in the results of the first quarter of 2021.
Historically, the first quarter represents the lowest product sales quarter of the year as U.S. patients work through deductibles, especially for products, including Enbrel, Otezla and Aimovig .
Total product revenues decreased 5% from the year-ago quarter to $5.89 billion (U.S.: $3.90 billion; ex-U.S.: $1.7 billion). Volumes rose 4% while net selling prices declined 7% due to increased discounting and rebates to maintain formulary access in increasingly competitive categories.
Other revenues of $309 million declined 15.7% year over year.
Performance of Key Drugs
Prolia revenues came in at $758 million, up 16% from the year-ago quarter driven by volume growth as new and repeat patient volumes continued to recover from the impact of the pandemic.
With most osteoporosis patients already receiving vaccinations and with diagnosis rates reaching almost 90% of pre-COVID-19 levels, Prolia sales are expected to continue to improve throughout 2021.
Xgeva delivered revenues of $468 million, down 3% from the year-ago quarter hurt by COVID-19 related lower demand in United States and lower pricing in Asia.
Kyprolis recorded sales of $251 million, down 10% year over year due to slower growth in the multiple myeloma segment as fewer patients initiated treatment amid the pandemic
Future growth of Kyprolis is expected to be supported by encouraging uptake for combination use of Kyprolis plus Darzalex and dexamethasone (based on CADOR study data).
Repatha generated revenues of $286 million, up 25% year over year, as higher volume was partially offset by unfavorable changes to estimated sales deductions and lower prices due to Amgen’s efforts to improve access and affordability for the product. Amgen expects further reduction in global net price of Repatha on a sequential basis.
Vectibix revenues came in at $191 million, down 5% year over year. Nplate sales rose 4% to $227 million. Blincyto sales increased 14% from the year-ago period to $107 million.
Parsabiv recorded sales of $79 million, down 55% due to volume declines following changes in reimbursement rules for the drug.
Aimovig recorded sales of $66 million in the quarter, down 7% year over year as volume growth was offset by lower net selling price, which was due to increased rebates to maintain patient access. Unfavorable changes to estimated sales deductions also hurt sales.
New osteoporosis drug, Evenity recorded sales of $107 million in the quarter compared with $90 million in the previous quarter driven by volume growth.
Sales of Otezla were $476 million in the quarter, down 1% as volume growth was offset by lower pricing and pandemic-related inventory stocking in the year-ago quarter. New-to-brand prescription volume remained flat as the pandemic is suppressing the diagnosis and treatment of psoriasis patients.
Biosimilar generated revenues of $570 million in the quarter driven by volume growth, which offset the impact of declines in net selling price. Sales of Kanjinti and Mvasi were $161 million and $294 million in the quarter, compared with $158 million and $280 million, respectively, in the previous quarter. Sales of Kanjinti improved sequentially as favorable changes to estimated sales deductions were offset by price declines due to increased competition. Amjevita sales were $106 million in the quarter, up 23% year over year as higher volumes were partially offset by lower net selling price.
Overall, for biosimilars, volume growth is expected to be partially offset by lower prices due to increased competition in 2021.
However, all the mature drugs like Enbrel, Aranesp, Epogen, Neupogen and Neulasta declined due to an array of branded and generic competitors. Enbrel revenues of $924 million declined 20% year over year due to favorable changes to estimated sales deductions in the prior year, lower volumes and price. The negative volume and net price trends are expected to continue in the future quarters.
Aranesp revenues declined 16% from the prior-year quarter to $355 million. Revenues of the other ESA, Epogen, declined 19% to $125 million. Neulasta revenues declined 21% from the year-ago period to $482 million. Neupogen recorded 48% decrease in sales to $34 million in the quarter. Sensipar/Mimpara revenues declined 81% to $23 million.
Operating Margins Decrease
Adjusted operating margin declined 270 basis points (bps) to 51.2%. Adjusted operating expenses rose 2% year over year in the quarter to $3.04 billion. SG&A spend decreased 5% to $1.23. R&D expenses rose 2% year over year to $944 million driven by higher spend on early-stage pipeline partially offset by lower spending on late-stage development program.
Adjusted tax rate was 13.6% for the quarter, a 0.6-point increase from the year-ago quarter.
Amgen repurchased 3.7 million shares worth $865 million in the quarter and has $5.5 billion remaining under its stock repurchase authorization.
2021 Guidance
Amgen maintained its revenue guidance for 2021 in the range of $25.8 billion-$26.6 billion and adjusted earnings per share guidance in the range of $16.00 to $17.00 per share.
Adjusted operating costs are expected to grow at a rate similar to 7% recorded in 2020 as the company invests in innovation, launch of new products and digitization efforts. While R&D costs are expected to increase, SG&A expenses are expected to decline. Operating margin is expected to be roughly 50% in 2021. Adjusted tax rate is expected in the range of 13.5% to 14.5% compared with the previous expectation of 13. Amgen expects net selling prices for its drugs to decline in the mid-single digit range in 2021.
Amgen plans to spend approximately $900 million for capital expenditures in 2021. The company expects to buy back shares in the range of $3 billion to $5 billion through the year (previously $3-$4 billion).
Q2 Outlook
In the second quarter, Amgen expects revenues to grow between 7% and 10% sequentially from the first quarter. Second-quarter revenues will be aided by higher other revenues due to recognition of revenues from the collaboration with Eli Lilly for the manufacture of COVID-19 antibodies.
Cost of sales is expected to increase as a percent of product sales reflecting the impact of the Lilly deal. Operating expenses are expected to increase in the mid-teens percentage range reflecting the impact of the Lilly deal.
The company expects continued business disruption from COVID-19 in the second quarter with a steady recovery in the second half supported by global vaccination.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Amgen has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Amgen has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.