Last week, you might have seen that Amgen Inc. (NASDAQ:AMGN) released its quarterly result to the market. The early response was not positive, with shares down 4.5% to US$217 in the past week. Revenues were US$6.4b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$3.43, an impressive 22% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Amgen from 25 analysts is for revenues of US$26.4b in 2021 which, if met, would be an okay 5.7% increase on its sales over the past 12 months. Statutory earnings per share are predicted to ascend 10% to US$13.73. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$26.5b and earnings per share (EPS) of US$13.77 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$252, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Amgen analyst has a price target of US$304 per share, while the most pessimistic values it at US$185. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Amgen's growth to accelerate, with the forecast 5.7% growth ranking favourably alongside historical growth of 2.1% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 21% per year. So it's clear that despite the acceleration in growth, Amgen is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Amgen's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$252, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Amgen. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Amgen going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - Amgen has 2 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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