Back to top

Image: Shutterstock

Amgen (AMGN) to Report Q1 Earnings: What's in the Cards?

Read MoreHide Full Article

Amgen, Inc. (AMGN - Free Report) will report first-quarter 2020 results on Apr 30, after market close. In the last reported quarter, the company delivered a positive earnings surprise of 5.81%.

The large biotech’s performance has been pretty impressive, with earnings beating estimates in each of the trailing four quarters. The company has a four-quarter positive earnings surprise of 6.04%, 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 0.6% this year so far compared with an increase of 3.0% for the industry.

 

 

 

 

 

Factors to Consider

In the first quarter, Amgen’s growth products like Prolia, Evenity, Repatha, Aimovig, Parsabivand Otezla are expected to have driven sales. 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 - Free Report) . Sales of Prolia, Xgeva, Blincyto, Parsabiv, Kyprolis and Nplate are likely to have been driven by higher demand trends once again.

However, increasing branded and generic competition for its legacy products like Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar are likely to have acted as an offsetting factor.

The respective Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Parsabiv and Kyprolis sales is pegged at $661 million, $503 million, $87 million, $179 million and $266 million.

Biosimilars may have once again been an important contributor to top-line growth driven by the launches of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) and Mvasi (biosimilar of Roche’s Avastin) in the United States in 2019. In December, the FDA granted approval to Avsola (ABP 710), Amgen’s biosimilar version of J&J/Merck’s blockbuster immunology medicine, Remicade. Management is expected to provide the sales numbers of Avsola for the first time onthe conference call. However, on the fourth-quarter conference call, Amgen had talked about additional biosimilar competition for Kanjinti and Mvasi and expects other players to enter the market in 2020 increasing competition and pricing pressure. The increased competitive pressure is expected to have put pressure on biosimilar sales in the first quarter.

Though Repatha sales are expected to have gained on higher unit demand, lower prices are likely to have acted as an offsetting factor. The Zacks Consensus Estimate for Repatha sales stands at $196 million.

Importantly, on first-quarter earnings call, investors will want to know the impact of the coronavirus outbreak on Amgen’s sales. First-quarter sales of J&J, Biogen Lilly and Sanofi that have reported earnings so far benefited from stockpiling of consumer healthcare products and basic medicines by consumers/patients amid coronavirus-led lockdown. Investors will be keen to know if Amgen experienced similar benefits in the first quarter.

Meanwhile, with half of the world under lockdown in the latter part of the quarter, completion of clinical studies is likely to have been delayed, which could in turn delay drug approvals and their launch. Investors will look for any such updates from Amgen.

Historically, the first quarter represents the lowest product sales quarter for Amgen. Per Amgen’s guidance, as a percent of the full year, product sales in the first quarter should look similar to the percentage seen in the first quarter of 2019, which was 23.8%.

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: Earnings ESP, which represents the difference between the Most Accurate Estimate of $3.68 and the Zacks Consensus Estimate of $3.70, is -0.47%. 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.

Stocks to Consider

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

Gilead Science (GILD - Free Report) with an Earnings ESP of +20.00% and a Zacks Rank #3. The company is scheduled to release results on Apr 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals (ALXN - Free Report) has an Earnings ESP of +1.08% and a Zacks Rank #2. The company is scheduled to release results on May 6.

The Hottest Tech Mega-Trend of All                

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>