Wednesday, April 20, 2011

Amgen (NASDAQ: AMGN): Q1 Earnings Preview 2011

Amgen Inc. (NASDAQ: AMGN), the world’s largest independent biotech company, is scheduled to release its first-quarter earnings after the closing bell on Wednesday, April 20, 2011. Analysts, on average, expect the company to report earnings of $1.29 per share on revenue of $3.68 billion. In the year ago quarter, the company reported earnings of $1.30 per share on revenue of $3.59 billion.

Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and delivers human therapeutics based on advances in cellular and molecular biology primarily in the United States, Europe, and Canada. The company markets primarily recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN erythropoietic-stimulating agents that stimulate the production of red blood cells; Neulasta and NEUPOGEN, which selectively stimulate the production of neutrophils, a type of white blood cell that helps the body fight infections; and Enbrel, an inhibitor of tumor necrosis factor that plays a role in the body’s response to inflammatory diseases.

In the preceding fourth quarter, the Thousand Oaks, California-based company’s net income was $1.02 billion or $1.08 per share, compared to $930 million, or 92 cents a share, in the prior-year quarter. On an adjusted basis, the company earned $1.17 a share in the fourth quarter. Revenue rose slightly to $3.84 billion from $3.81 billion. Analysts, on average, expected the company to report earnings of $1.10 per share on revenue of $3.81 billion. 

At its last earnings call in January, Amgen said that it anticipates fiscal 2011 adjusted earnings of $5.00 to $5.20 per share, and total revenue of $15.1 billion to $15.5 billion. The total impact of U.S. health care reform in 2011 is expected to be in the range of $400 million to $500 million. This includes the federal excise fee which is expected to be in the range of $150 million to $200 million. The company also expects 2011 capital expenditures to be about $600 million.

Recently, the company said that it is expanding its operations in Brazil, acquiring a cancer drug company for $215 million and regaining the rights to market some of its own products in Brazil. Amgen said it Brazil is one of the 10 biggest pharmaceutical markets in the world, making it an important part of the company's international strategy. Amgen said Brazil could become the fifth-largest pharmaceutical market by 2015. Amgen acquired the privately held drugmaker Bergamo and agreed to regain the rights to its colorectal cancer drug Vectibix, the hyperparathyroidism treatment Mimpara and one drug candidate. Amgen said Bergamo supplies cancer therapies to hospitals. The company had $80 million in revenue in 2010, and sales have been growing at a rate of 19 percent a year since 2007.

Amgen is seeking to increase the use of its bone drug denosumab and further its reach into the oncology market. In US, the drug is currently sold under the brand names Prolia for osteoporosis and Xgeva for cancer patients.  Xgeva, approved in December 2010, is seen as a potential multibillion-dollar product.Amgen is expected to give more details today on how it did during its first full quarter on the market.

Investors will also be looking for a dividend announcement, perhaps starting this year or in 2012 at the latest; an update on reimbursement for Prolia and the commercial uptake of Xgeva; guidance on long-term spending, including strategic goals for research and development investment; and a review of Amgen's drug research pipeline.

The company's stock currently trades at a forward P/E  (fye Dec 31, 2012) of 9.92 and PEG ratio (5 yr expected) of 1.46. In terms of stock performance, Amgen shares have lost nearly 10 percent over the past year.

Full Disclosure: None.
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