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Amgen (AMGN) to Report Q4 Earnings: What's in the Cards?

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Amgen, Inc. (AMGN - Free Report) will report fourth-quarter and full-year 2022 results on Jan 31, after market close. In the last reported quarter, the company delivered an earnings surprise of 6.09%.

This large biotech’s performance has been strong, with earnings beating estimates in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 4.45%, 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 risen 14.7% in the past year against a decrease of 6.9% for the industry.


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Factors to Consider

In the fourth quarter, volume growth from Amgen key drugs like Prolia, Repatha, Otezla, Evenity, among others is expected to have driven top-line growth. However, 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.

Also, pricing pressure, currency headwinds and increased competition are likely to have continued to hurt sales of some drugs as well as biosimilar products.

The respective Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Repatha, Kyprolis and Evenity sales is pegged at $925 million, $528 million, $149 million, $325 million, $313 million and $210 million, respectively.

Our estimates for Prolia, Xgeva, Blincyto, Repatha, Kyprolis and Evenity sales are pegged at $941.2 million, $518.1 million, $152.2 million, $333.4 million, $305.2 million and $218.6 million, respectively.

The Zacks Consensus Estimate for Otezla is $654 million, while our estimate is $640.2 million.

In the third quarter, sales of Amgen’s new KRAS inhibitor, Lumakras, declined sequentially due to a lower net selling price due to reimbursement approval in Germany, resulting in an unfavorable price adjustment. It remains to be seen if sales improved in the fourth quarter. The Zacks Consensus Estimate for Lumakras/Lumykras is $93 million, while our estimate is $85.6 million.

Another new drug, Tezspire (tezepelumab) is likely to have been a key contributor to profits in the fourth quarter. Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. In September, AstraZeneca announced that Tezspire was approved in Japan and Europe. Amgen and AstraZeneca share costs and profits equally after payment by AstraZeneca of a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads the development, Amgen leads manufacturing. 

For oncology biosimilars Kanjinti and Mvasi, volume decline and price erosion due to increased competition are expected to have hurt the top line.

In December, Amgen entered into a definitive agreement to acquire Horizon Therapeutics (HZNP - Free Report) for $116.5 per share in cash or $27.8 billion. The acquisition will add a complementary portfolio of rare disease drugs like Tepezza, Krystexxa and Uplizna to Amgen’s broad and diversified portfolio and should be accretive to the bottom line by 2024.

Concurrent with the third-quarter results, Horizon said it expects Tepezza annual sales percentage growth in 2022 in the high teens and Krystexxa full-year 2022 net sales growth to be approximately 25% compared to the previous guidance of more than 20%. Amgen expects an estimated annual pre-tax cost reduction of at least $500 million by the end of the third fiscal year following completion. An update is expected on the fourth-quarter conference call.

Earnings Whispers

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 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at $4.02 per share. 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.

Stock to Consider

A large drug stock that has the right combination of elements to beat on earnings this time around is Merck (MRK - Free Report) , which has an Earnings ESP of +1.20% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck’s stock has risen 36.6% in the past year. Merck beat earnings estimates in each of the last four quarters. MRK has a four-quarter average earnings surprise of 16.07%, on average. Merck is scheduled to release its fourth-quarter results on Feb 2.

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