Earlier today, the world’s largest biotechnology company, Amgen Inc. (NASDAQ:AMGN) reported its earnings results for fiscal Q3 after the closing bell, and the company posted better than anticipated earnings and revenue, despite the fact that the company’s total net income was hit hard by the firm's recent restructuring effort.
AMGN has spent a sizeable amount of money (approximately $376 million, and perhaps $150 million in Q4) trying to restructure itself. AMGN has recently had to deal with approximately 2,900 lay-offs, and plant closings, in order to reallocate resources and efforts towards producing a potential best-seller cholesterol drug.
AMGN spiked higher in after hours despite the fact that the firm missed net income estimates, and many investors are still waiting for more information regarding the company’s overall restructuring plans, and tomorrow (Tuesday), in New York, AMGN will carry out a business update.
AMGN stock closed on Monday at $148.20/share and the stock is up in after hours trading, by about $1.55/share, or 1.05%, edging very close to the $150/share price tag, which will serve as a milestone for the AMGN’s stock.
Amgen announced that it had earned $2.30 EPS, which exceeded the Zacks Consensus estimate by $0.24/share. This is not bad at all, considering how AMGN has been consistent with positively surprising EPS estimates, and how the company retains an average surprise of 11.11%.
AMGN has also readjusted its earnings expectations for 2014, raising EPS from $8.20 - $8.40 to $8.45 - $8.55 EPS. AMGN’s recorded revenue for Q3 was up by 6%, to $5.03 billion, beating Wall Street’s estimate of $4.96 billion. The company previously forecasted $19.5 - $19.7 billion in revenue, however now it has also raised this to $19.8 – $20.0 billion. Lastly, AMGN conceded on net profit. Net income was down from $1.37 billion in Q3 2013, to $1.24 billion Q3 2014.
Financials aside, AMGN’s prospects do not look too bad for the future either, sales of the white blood cell booster, Neulasta, surged by 5%, amounting to about $1.19 billion. Kyprolis, on the other hand, is a multiple myeloma drug that was more or less acquired through AMGN’s mammoth acquisition of Onyx Pharmaceuticals last year, and the drug had sales of $94 million.
AMGN also sells Prolia, a treatment drug for osteoporosis, and Prolia sales managed to jump 43% to $255 million; however that is not as good as last quarter’s revenues of $264 million from the drug.
Enbrel, the rheumatoid arthritis drug followed in Prolia’s footsteps, and failed to shine as sales fell by about 3%. However AMGN was quick to mention that inventory issues hurt the sales for Q3, though as investors, we also have to keep in mind that other biotechnology companies are competing with AMGN. Celgene (NASDAQ:CELG) is another large biotech company that is aiming to render Kyprolis obsolete with its own drug, Pomalyst, which accomplished $181 million in sales for the company in Q3.
Bottom Line
AMGN seems like a very solid and reputable company without a doubt, but we can expect cutthroat competition and AMGN is going to have to pick up the pace with the needed restructuring process, so as not to fall behind in regards to market share or R&D.
We can expect AMGN’s wide variety of products to contribute to its continued growth and top line revenue, and perhaps when restructuring is finished, the company can march even higher. AMGN has been an excellent investment for investors, and we may see the stock rise on Tuesday.
Still, AMGN sports a Zacks Rank #3 (Hold). Despite the very high forward P/E and PEG ratios when compared to the industry’s average, AMGN is performing relatively well compared to other biotechnology giants, such as Gilead Sciences (NASDAQ:GILD), Illumina Inc. (NASDAQ:ILMN), Intercept Pharmaceuticals (NASDAQ:ICPT), and Biogen Idec Inc. (NASDAQ:BIIB).
All of the aforementioned stocks maintain a Zacks Rank #1 (Strong Buy), or #2 (Buy), except for GILD, and that is most likely due to how it fares after it conducts its earnings conference call after the closing bell on Tuesday. The following is a comparison between the aforementioned stocks and the S&P 500 Index for those looking at making a biotech investment now: