Another Strong Earnings Beat from Amgen - Analyst Blog

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Amgen ( AMGN ) reported fourth quarter 2013 earnings of $1.81 per share, 17 cents above the Zacks Consensus Estimate and 30.2% above the year-ago earnings. Higher revenues, the end of the Enbrel profit share, a lower tax rate and a lower share count contributed to the year-over-year increase in earnings despite higher R&D spend. Fourth quarter results included the impact of the Oct 2013 Onyx acquisition.

Total revenues increased 13% to $5,011 million in the fourth quarter of 2013, well above the Zacks Consensus Estimate of $4,794 million.

Including one-time items, fourth quarter earnings increased 32% to $1.33 per share.


Full year 2013 revenues increased 8% to $18,676 million, topping the Zacks Consensus Estimate of $18,279 million. Earnings increased 17.4% to $7.57 per share, well above the Zacks Consensus Estimate of $7.38 per share.

The Quarter in Detail

Fourth quarter total product revenues increased 11% from the year-ago quarter to $4,799 million (U.S.: $3,687 million, ex-U.S.: $1,112 million) with products like Neulasta, Epogen, Enbrel, Prolia and Xgeva driving growth.

Revenues of Amgen's erythropoiesis-stimulating agent (ESA) Aranesp declined 4% from the year-ago quarter to $470 million (U.S.: $180 million; ex-U.S.: $290 million). Lower demand in the U.S. due to dose reductions and in Europe due to competition and price cuts will continue impacting sales in these regions.

Revenues of Amgen's other ESA, Epogen, grew 10% to $525 million, driven by unit demand.

Worldwide revenues of Neulasta and Neupogen increased 8% to $1,407 million in the fourth quarter.

Enbrel delivered revenues of $1,200 million, up 3% from the year-ago quarter. Revenues were driven by price increases. The company has been taking steps to improve Enbrel's performance which includes optimization of the sales force, higher direct-to-consumer (DTC) advertising and increased focus on appropriate access.

Fourth quarter 2013 Prolia revenues came in at $236 million, up 53% from the year-ago quarter. Revenues improved 32.6% on a sequential basis due to higher segment share in the U.S. and the EU. Amgen also reported a positive response to the DTC campaign in the U.S.

Meanwhile, Xgeva delivered fourth quarter 2013 revenues of $286 million, up 33% from the year-ago quarter. Sales were up 9.6% on a sequential basis.

Sensipar/Mimpara revenues increased 20% from the year-ago quarter to $307 million due to segment growth and higher penetration in Europe. Vectibix revenues came in at $102 million during the quarter, up 12% from the year-ago quarter.

Kyprolis, an Onyx product, posted sales of $73 million, up 12.3% sequentially.

While fourth quarter 2013 R&D expenses increased 27% from the year-ago period, SG&A expenses declined 3%. Investment in late-stage clinical programs for Kyprolis and evolocumab led to the increase in R&D spend. Meanwhile, the end of the Enbrel profit share with Pfizer ( PFE ) led to lower SG&A spend.

Amgen did not repurchase any shares during the fourth quarter with $1.6 billion remaining under its share buyback program. Amgen expects its share buyback activities to slow down in 2014 and 2015 with a higher focus on increasing dividend meaningfully.

Amgen continues to progress with its pipeline and currently has 10 molecules in late-stage development with data due by 2016.

2014 Guidance

During 2014, Amgen expects to earn $7.90 - $8.20 per share on total revenues of $19.2 billion to $19.6 billion. The company expects operating income to be boosted by $800 million due to the end of the Enbrel profit-sharing arrangement. The Zacks Consensus Estimate for earnings and revenues are within the guidance range at $7.92 per share and $19.4 billion, respectively.

Our Take

Once again, Amgen impressed with strong results. However, the company's guidance for 2014 was a tad disappointing. Not only are estimates towards the lower end of the guidance range, the revenue guidance provided by the company implies a slower growth rate. But if we go by Amgen's past record, guidance could well prove to be conservative - last year too, the company had started off with a conservative guidance which was increased through the course of the year.

Meanwhile, we expect 2014 to be a data rich year for the company as it gears up to present data on several late-stage candidates. Importantly, Amgen could be in a position to file for approval of its PSCK9 inhibitor, evolocumab, this year. Investors will also be focused on the FOCUS data on Kyprolis.

Amgen currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biotech sector include Medivation, Inc. ( MDVN ) and Alnylam Pharmaceuticals, Inc. ( ALNY ). While Medivation is a Zacks Rank #1 (Strong Buy) stock, Alnylam carries a Zacks Rank #2 (Buy).



ALNYLAM PHARMA (ALNY): Free Stock Analysis Report

AMGEN INC (AMGN): Free Stock Analysis Report

MEDIVATION INC (MDVN): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ALNY , AMGN , MDVN , PFE

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