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Amgen’s 1Q Results Disappoint; Shares Drop 8%

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Amgen’s (AMGN) shares fell around 8% in early trading on Wednesday as the biopharmaceutical company reported disappointing results. Revenues fell 4% year-on-year to $5.9 billion, missing analysts’ estimate of $6.3 billion. The company reported a 12% year-on-year decline in non-GAAP EPS to $3.70, missing consensus estimates of $4.04 per share.

Amgen’s Chairman and CEO, Robert A. Bradway said, “While our business continued to be impacted by the COVID-19 pandemic particularly in the first two months of the quarter, we are encouraged by strong volume trends in many of our newer products and remain confident in the outlook for the full year.”

“We also continue to advance key pipeline opportunities, including three late-stage assets that have earned Breakthrough Therapy Designation from the U.S. Food and Drug Administration,” Bradway added.

AMGN’s decline in revenues was driven by a decrease in net selling prices as the COVID-19 pandemic resulted in a fall in patient visits and diagnosis of new patients. The company also said that demand for its products was negatively impacted in the months of January and February as the pandemic surged in both the US and Europe.

The company continues to expect the COVID-19 pandemic to have a negative impact on its 2Q results.

For FY21, AMGN expects revenues to land between $25.8 billion and $26.6 billion and non-GAAP EPS to be in the $16 to $17 range. The company has forecast capex to be around $900 million and expects to repurchase shares to the value of between $3 billion and $5 billion. (See Amgen stock analysis on TipRanks)

Following the earnings, JP Morgan analyst Cory Kasimov reiterated a Hold rating on the stock and lowered the price target from $222 to $215. This implies downside potential of around 9% from current levels.

Kasimov said in a note to investors, “Amgen posted an uncharacteristically messy quarter with revenue and non-GAAP EPS coming in 6% and 8% below consensus estimates, respectively (the largest miss for the company in 10+ years). The ongoing pandemic and tough year over year comp contributed to the weakness”

“Despite the disappointing print, the conservative initial guide enabled management to reaffirm revenue and non-GAAP EPS guidance that assumes normalization weighted to 2H21… Overall, the weakness in 1Q gives little room for error on the commercial front and key catalysts seem to be back end loaded,” Kasimov added.

Overall, consensus on the Street is that AMGN is a Moderate Buy based on 9 Buys, 7 Holds, and 2 Sell. The average analyst price target of $254.38 implies upside potential of about 8% to current levels.

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