Amgen (AMGN) 2nd Quarter Earnings: What to Expect

Amgen building and logo
Credit: Robert Galbraith - Reuters / stock.adobe.com

Biotech specialist Amgen (AMGN) is set to report second quarter fiscal 2020 earnings results after the closing bell Tuesday. Shares of AMGN, up 3% year to date, has been a bright spot in the healthcare sector’s recovery, rising as much as 43% since its March low.

Thanks to growth products such as Otezla, Evenity and Repatha, among others, Amgen has beaten earnings estimates in each of the past four quarters. The company collective business focuses on six different therapeutic fields: neurology and bone health, nephrology, inflammation, aematology/oncology and cardiovascular disease. Not only are each segment growing at healthy clips, Amgen has been rewarded for its strong execution track record.

But the company’s quarterly results are likely to have been adversely impacted by uncertainty related to COVID-19. And with the stock earlier this month reaching an all-time high, investors are understandably questioning Amgen’s valuation, given the risks ahead, namely shelter-in-place restrictions that are still enacted in many states, which may limit patient visits to doctor clinics, thereby impeding access or sales of Amgen products as doctors are unable to diagnosis treatment.

But COVID-19 is not just a potential headwind for the company. Amgen is also taking the pandemic head on. The company announced on April 30 during its Q1 earnings release that it would test Otezla (its inflammation drug) as a coronavirus treatment. The company also partnered with Adaptive to develop coronavirus treatments or preventative drugs, focusing on ways to identify antibodies that could neutralize SARS-CoV-2. On Tuesday these are some of the topics investors will focus on.

For the quarter that ended in June, the Thousand Oaks, CA.-based company is projected to earn $3.82 per share on revenue of $6.18 billion. This compares to the year-ago quarter when earnings came to $3.97 per share on revenue of $5.87 billion. For the full year, ending in December, earnings are projected to rise 5.5% year over year to $15.63 per share, while full-year revenue of $25.45 billion would rise 7.2% year over year.

With both the top and bottom lines expected to rise this quarter, this underscores the recent rise in Amgen’s stock price. What’s more, Amgen has a highly diversified product portfolio where its two-biggest revenue-driving products inflammatory drug Enbrel ($5 billion) and Neulasta ($3 billion) combined to account for about 38% of sales. In the first quarter, both products powered Amgen back to growth with earnings rising 17%, while revenue rose 11%.

The company reported Q1 earning of $4.17 per share on revenue of $6.16 billion, which beat consensus of $3.75 per share on $6.02 billion. Notably, both figures showed strong acceleration from the year earlier. The company's biggest growth came from cholesterol treatment medication Repatha, which surged 62% year over year to $229 million. The improvements in these metrics are certain to be the focus among analysts on Tuesday.

Amgen affirmed some confidence last quarter by reiterating its outlook for 2020 which was notable given the concerns surrounding the coronavirus pandemic, further highlighting the belief the management team has in their ability to execute. But market is already pricing that in. Now the company must deliver.

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

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Richard Saintvilus

After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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