Yahoo Finance Can Amgen (AMGN) Keep the Earnings Streak Alive in Q1?
We expect Amgen AMGN to beat expectations when it reports first-quarter 2023 results on Apr 27, after market close. In the last reported quarter, the company delivered an earnings surprise of 1.24%.
This large biotech’s performance has been strong, with earnings beating estimates in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 3.43%, on average.
Amgen Inc. Price and EPS Surprise
Amgen Inc. price-eps-surprise | Amgen Inc. Quote
Amgen’s stock has declined 3.3% in the past year compared with a decrease of 9.2% for the industry.
Image Source: Zacks Investment Research
Factors to Consider
The first quarter is expected to have been the lowest revenue quarter of the year. Revenues are expected to be slightly below the figure reported for the first quarter of 2022. Product sales are expected to have been flat from the prior-year levels, while other revenues are expected to have been lower on a year-over-year basis due to a decline in revenues from Amgen’s COVID-19 manufacturing collaboration with Eli Lilly.
In the first quarter, volume growth from Amgen key drugs like Prolia, Repatha and Evenity, among others is expected to have driven top-line growth.
In addition, newer drugs like Tezspire and Tavneos are expected to have contributed to top-line growth. Amgen has a partnership with AstraZeneca AZN for Tezspire. In September, AstraZeneca announced that Tezspire was approved in Japan and Europe. Amgen and AstraZeneca share costs and profits equally after payment by AstraZeneca of a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
However, increasing branded and generic competition for its legacy products like Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar is likely to have hurt the top line. Negative volume and net price trends are likely to have hurt Enbrel’s sales.
Also, pricing pressure, currency headwinds and increased competition are likely to have continued to hurt sales of some drugs as well as biosimilar products. While increased competitive pressure is expected to have hurt Xgeva’s sales, a lower selling price to maintain broad patient access amid rising competition is expected to have hurt Aimovig’s sales.
Sales of Otezla and Enbrel are expected to have been lower in the first quarter per historical trends due to the impact of benefit plan changes, insurance re-verification and increased co-pay expenses as U.S. patients work through deductibles.
Due to this effect, Amgen believes that first-quarter 2023 Otezla sales could be in line with or below first-quarter 2022 sales.
The Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Repatha, Kyprolis and Evenity sales is pegged at $911 million, $497 million, $156 million, $342 million, $313.0 million and $226 million, respectively.
Our estimates for Prolia, Xgeva, Blincyto, Repatha, Kyprolis and Evenity sales are pegged at $933.9 million, $484.3 million, $139.9 million, $330.5 million, $305.6 million and $245.4 million, respectively.
The Zacks Consensus Estimate for Otezla is $503 million, while our estimate is $503.6 million.
In the fourth quarter, sales of Amgen’s new KRAS inhibitor, Lumakras, declined sequentially due to lower net selling prices, unfavorable changes to estimated sales deductions and an unfavorable one-time adjustment. It remains to be seen if sales improved in the first quarter as the impact of the negative factors is expected to have reversed. The Zacks Consensus Estimate for Lumakras/Lumykras is $91 million, while our estimate is $118.9 million.
Volume decline and price erosion due to increased competition are expected to have hurt its oncology biosimilars, Kanjinti and Mvasi.
In January, Amgen launched Amjevita in the United States at a list price 55% below the current list price set by AbbVie ABBV for Humira. Amgen is the first company to have launched a biosimilar of AbbVie’s Humira in the United States. Investors will be keen to know the sales numbers of Amjevita in the first quarter. Amgen already markets a biosimilar of AbbVie’s Humira, Amgevita, outside the United States.
Adjusted operating margin is expected to be below 50%, as a percentage of product sales, in the first quarter.
Earnings Whispers
Our proven model predicts an earnings beat for Amgen in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.
Earnings ESP: Amgen’s Earnings ESP is +1.82% as the Most Accurate Estimate of $3.91 is higher than the Zacks Consensus Estimate of $3.84. 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.
Another Stock to Consider
A large drug stock that has the right combination of elements to beat on earnings this time around is Novo Nordisk NVO. It has an Earnings ESP of +10.71% and a Zacks Rank #1.
Novo Nordisk’s stock has risen 51.8% in the past year. Novo Nordisk topped earnings estimates in three of the last four quarters while missing in one. It has a four-quarter earnings surprise of 3.0%, on average. NVO is scheduled to release its first-quarter results on May 4.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AstraZeneca PLC (AZN) : Free Stock Analysis Report
Novo Nordisk A/S (NVO) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
