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Is a Beat Likely for Amgen (AMGN) This Earnings Season?

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We expect Amgen, Inc. (AMGN - Free Report) to beat expectations when it reports fourth-quarter and full-year 2021 results on Feb 7, after market hours. In the last reported quarter, the company delivered an earnings surprise of 10.7%.

The large biotech’s performance has been mixed with earnings beating estimates in three of the trailing four quarters while missing in one. The company delivered a four-quarter earnings surprise of 5.65%, on average.

Amgen Inc. Price and EPS Surprise

Amgen Inc. Price and EPS Surprise

Amgen Inc. price-eps-surprise | Amgen Inc. Quote

Amgen’s stock has declined 2% in the past one year compared with a decrease of 37.5% for the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Factors to Consider

In the fourth quarter, volume growth from Prolia, Xgeva, Kyprolis, Repatha, Nplate, Blincyto, Evenity, and Amgen’s biosimilars portfolio is expected to have been partially offset by biosimilar/generic competition for mature drugs. The lingering effects of COVID-19 and increased competitive pressure on some drugs are likely to have hurt sales.

The respective Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Repatha, Evenity and Kyprolis sales is pegged at $828 million, $531 million, $116 million, $301 million, $153 million and $307 million.

In the fourth quarter, though the company is likely to have seen a continued recovery in patient visits and diagnoses rates, new patient starts may have remained suppressed due to a gap in doctor office visits amid rising infection rates due to the Omicron variant.

Lower selling prices due to increased discounting and rebates to maintain formulary access in increasingly competitive categories are expected to have hurt sales of almost all drugs in the quarter.

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. Negative volume and net price trends are likely to have hurt Enbrel’s sales in fourth quarter. Parsabiv sales are likely to have declined due to changes in reimbursement rules for the drug

Meanwhile, lower pricing is likely to have hurt sales of Otezla, offsetting the benefit from volume growth. The FDA approved Otezla for the mild-to-moderate psoriasis indication in December 2021. The label expansion approval is unlikely to have had any positive impact on Otezla’s sales growth in the fourth quarter. The Zacks Consensus Estimate for Otezla is $651 million.

Fourth-quarter sales of Amgen’s newly approved KRAS inhibitor, Lumakras, are likely to have been higher than $36 million recorded in the third quarter. Lumakras, a first-in-class lung cancer treatment, was off to an excellent start while its label expansion studies have been progressing rapidly.

For biosimilars, volume growth is likely to have been offset by lower pricing due to increased competition.

As regard costs, while R&D is expected to increase to support registration enabling lung and gastric cancer studies, SG&A expenses are expected to have declined in the fourth quarter.

Key Development in the Quarter

The FDA approved Amgen and partner AstraZeneca’s (AZN - Free Report) monoclonal antibody, tezepelumab for the treatment of severe asthma. The medicine, by the trade name of Tezspire, was launched this month. The approval for Tezspire was based on data from the PATHFINDER clinical program and included the pivotal phase III NAVIGATOR study. In the studies, which included a broad population of severe asthma patients, Amgen and AstraZeneca’s Tezspire consistently and significantly reduced exacerbations. It is the only biologic medicine approved by the FDA to treat severe asthma with no phenotype limitation and irrespective of biomarker levels

AstraZeneca and Amgen are jointly developing Tezspire. While AstraZeneca leads the development of the drug, Amgen leads manufacturing. Amgen and AstraZeneca will jointly commercialize Tezspire in North America. 

Earnings Whispers

Our proven model predicts an earnings beat for Amgen in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.

Earnings ESP: Amgen’s Earnings ESP is +2.53% as the Most Accurate Estimate of $4.24 is higher than the Zacks Consensus Estimate of $4.14. 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

Other Stocks to Consider

Here are some large drug/biotech stocks that also have the right combination of elements to beat on earnings this time around:

Moderna (MRNA - Free Report) with an Earnings ESP of +3.28% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moderna topped earnings estimates in two of the last four quarters. Moderna has a four-quarter negative earnings surprise of 35.84%, on average. Estimates for Moderna’s 2022 earnings have gone up from $25.14 per share to $26.98 per share over the past 60 days.

The stock has risen 8.9% in the past year.

Pfizer (PFE - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank #1

Pfizer’s stock has risen 56.8% in the past year. Estimates for Pfizer’s 2022 earnings have gone up from $4.59 per share to $6.14 per share over the past 60 days.

Pfizer’s earnings performance has been mixed, with the company exceeding earnings expectations in three of the last four quarters while missing in one. PFE has a four-quarter earnings surprise of 10.85%, on average.

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