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Amgen (AMGN) to Report Q1 Earnings: What's in the Cards?

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Amgen, Inc. AMGN will report first-quarter 2021 results on Apr 27, after market close. In the last reported quarter, the company delivered an earnings surprise of 13.39%.

The large biotech’s performance has been pretty impressive, with earnings beating estimates in each of the trailing four quarters. The company delivered a four-quarter earnings surprise of 13.54%, on average.

Amgen Inc. Price and EPS Surprise

Amgen Inc. Price and EPS Surprise
Amgen Inc. Price and EPS Surprise

Amgen Inc. price-eps-surprise | Amgen Inc. Quote

Amgen’s stock has risen 11% this year so far against a decrease of 2% for the industry.

Factors to Consider

Historically, the first quarter of 2021 represents the lowest product sales quarter of the year for Amgen as U.S. patients work through deductibles, especially for products, including Enbrel, Otezla and Aimovig.

The first quarter of 2020 had benefited from roughly $100 million in inventory build due to COVID-19, which was absent in the first quarter of 2021. Nonetheless, in the first quarter, volume growth from Prolia, Otezla Repatha, Evenity, Aimovig, and Amgen’s biosimilars portfolio is expected to have been partially offset by biosimilar/generic competition for mature drugs and accelerating erosion in U.S. Parsabiv sales due to changes in reimbursement rules for the drug.

In the second half of 2020, Amgen experienced recovery from peak impact of the COVID-19 pandemic as physician interaction and prescription trends of several drugs like Prolia and Xgeva improved. Though the recovery is expected to have continued in the first quarter, the impact of rising COVID-19 infection rates is to be seen.

Meanwhile, higher volumes may have benefited sales of Blincyto, Nplate, Repatha, Vectibix Otezla and Evenity.

New patient share helped by encouraging uptake for combination use of Kyprolis plus Darzalex and dexamethasone (based on CADOR study data) might have pulled up sales of Kyprolis. Parsabiv sales in the first quarter are expected to be the lowest of the year as customers depleted inventory build in the second half of 2020.

The Zacks Consensus Estimate for Prolia is $701 million, Xgeva is $485 million, Blincyto is $103 million, Parsabiv is $116 million, Repatha is $244 million, Kyprolis is $277 million and Otezla is $585 million.

Also, increasing branded and generic competition for its legacy products like Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar are likely to have hurt the top line. In the first quarter of 2020, Enbrel benefited from approximately $115 of favorable changes to estimated sales deductions, which will not reflect and thereby hurt results of the first quarter of 2021. The Zacks Consensus Estimate for Enbrel is $1.10 billion.

For biosimilars, volume growth may have been partially offset by lower prices due to increased competition. Market expansion and volume growth are expected to benefit Mvasi’s (biosimilar of Roche’s [RHHBY] Avastin) sales while lower prices due to increased competition may hurt sales. Kanjinti’s (Amgen’s biosimilar of Roche’s Herceptin) sequential sales may have declined, similar to the fourth quarter of 2020, as volume gains might have been offset by price declines

Meanwhile, in December, the FDA approved Riabni, a biosimilar to Roche’s Rituxan. Amgen may report first sales from the biosimilar product in the first quarter.

Investments in innovation, launch of new products and digitization efforts are expected to have increased operating expenses in the first quarter.

Key Development in the Quarter

In March, Amgen announced an agreement to acquire small biotech, Five Prime Therapeutics or $38.00 per share in cash (an equity value of approximately $1.9 billion) to strengthen its oncology portfolio. The acquisition will add the latter’s lead pipeline candidate, bemarituzumab, a first-in-class, phase III ready, anti-FGFR2b antibody, to its portfolio. The transaction closed last week.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Amgen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Amgen’s Earnings ESP is -4.62% as the Zacks Consensus Estimate is pegged at $4.00 and the Most Accurate Estimate is lower at $3.81. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Amgen has a Zacks Rank #3.

Stocks to Consider

Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

AstraZeneca AZN with an Earnings ESP of +5.26% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences GILD has an Earnings ESP of +6.00% and a Zacks Rank #3.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report

Roche Holding AG (RHHBY) : Free Stock Analysis Report

Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report

Amgen Inc. (AMGN) : Free Stock Analysis Report

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