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Amgen (AMGN) Up 5.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Amgen (AMGN - Free Report) . Shares have added about 5.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amgen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Q2 Earnings & Sales Beat
Amgen’s second-quarter results were strong as it beat estimates for earnings as well as for sales.
Amgen reported second-quarter 2024 adjusted earnings of $4.97 per share, which beat the Zacks Consensus Estimate of $4.93. Earnings declined 1% year over year due to higher operating costs and higher interest expenses.
Total revenues of $8.39 billion beat the Zacks Consensus Estimate of $8.31 billion. Total revenues rose 20% year over year.
Total product revenues increased 20% from the year-ago quarter to $8.04 billion. Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 26% in the quarter while prices declined 3%.
Other revenues were $347 million in the quarter, up 14.5% year over year.
Twelve products, including Prolia, Repatha, Blincyto, Tezspire and Evenity, achieved double-digit volume growth in the quarter. Rare disease drugs, mostly Horizon’s products, added $1.1 billion in sales in the quarter. Excluding the contribution from Horizon, product sales grew 5% while volumes rose 10%.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.17 billion, up 13% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $1.1 billion as well as our model estimate of $1.08 billion.
Evenity recorded sales of $391 million in the quarter, up 39% year over year, driven by solid volume growth in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $367.0 million as well as our model estimate of $349.0 million.
Repatha generated revenues of $532 million, up 25% year over year. Repatha volumes rose 46% due to expanded formulary coverage in the United States. The volume growth was partially offset by lower prices due to higher rebates to support expanded access. Repatha sales beat the Zacks Consensus Estimate of $531.0 million and our model estimate of $521.1 million.
Hematology-Oncology
Xgeva delivered revenues of $562 million, up 6% year over year, driven by higher net selling prices. Xgeva sales beat the Zacks Consensus Estimate of $547.0 million while slightly missing our model estimate of $567.6 million.
Kyprolis recorded sales of $377 million, up 9% year over year, driven by volume growth in outside U.S. markets. Vectibix revenues came in at $270 million, up 9% year over year, driven by higher net selling price and volume growth. Nplate sales rose 12% to $346 million.
Blincyto sales increased 28% from the year-ago period to $264 million, driven by volume growth as the drug benefited from broad prescribing for patients with B-cell precursor acute lymphoblastic leukemia (ALL). The FDA granted approval to Blincyto as a frontline consolidation treatment for patients with Philadelphia chromosome-negative B-cell ALL in June.
Lumakras/ Lumykras recorded sales of $85 million in the quarter, up 10% from the year-ago period.
Imdelltra (tarlatamab), approved for pre-treated advanced small cell lung cancer (ES-SCLC) in May 2024, recorded sales of $12 million in the second quarter. On the conference call, Amgen said that it is encouraged by the early launch trends of Imdelltra in SCLC.
In oncology biosimilars, sales of Mvasi were $157 million in the quarter, down 20% year over year.
Inflammation
Sales of Otezla were $544 million in the quarter, down 9% due to lower selling price and unfavorable changes to estimated sales deductions, which offset the benefit from volume growth of 2%. Otezla sales missed the Zacks Consensus Estimate of $594.0 million as well as our estimate of $544.8 million.
Enbrel revenues of $909 million declined 15% year over year due to lower selling price. Enbrel sales missed the Zacks Consensus Estimate of $949.0 million as well as our estimate of $963.5 million.
Going forward, Amgen expects volumes to be flat for Enbrel while net selling price is expected to continue to decline including the impact from the IRA Medicare Part D price set by CMS.
Tezspire (tezepelumab) recorded sales of $234 million in the quarter, up 76% year over year, driven by volume growth. Tezspire volumes benefited from the uptake of the new self-administered, pre-filled, single-use pen formulation of the drug.
Amjevita/Amgevita sales were $133 million in the quarter, down 11% year over year.
Rare Disease
Amgen closed the acquisition of Horizon Therapeutics for $27.8 billion on Oct 6, 2023, which added several rare disease drugs like Tepezza, Krystexxa and Uplizna to its portfolio.
Tepezza, Krystexxa and Uplizna generated sales of $479 million, $294 million and $92 million, respectively, in the second quarter. Tepezza sales rose 8% year over year and 13% quarter over quarter, when compared to results from the legacy Horizon business. Similarly, Krystexxa rose 20% year over year and Uplizna rose 35% year over year.
Ultra-rare products acquired from Horizon generated revenues of $187 million in the quarter.
New drug Tavneos generated $71 million in sales in the second quarter compared with $51 million in the previous quarter. The drug’s 39% sequential growth was driven by new patient volume growth.
Established Products
Total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 21% year over year in the quarter to $591 million.
Operating Margins Decline
Adjusted operating margin declined 4.4 percentage points to 48.2% in the quarter.
Adjusted operating expenses increased 30% to $4.52 billion. R&D expenses rose 30% year over year to $1.42 billion due to higher spending on later-stage clinical programs. SG&A spending rose 36% to $1.69 billion, primarily driven by the addition of Horizon.
The adjusted tax rate was 14.9% for the quarter, a 1.5-point decrease from the year-ago quarter.
2024 Guidance
Amgen tightened its revenue guidance from a range of $32.5 billion to $33.8 billion to $32.8 billion to $33.8 billion. Amgen expects its fourth-quarter revenues to rise in a mid-single-digit range sequentially.
Adjusted earnings guidance was also tightened from a range of $19.00 to $20.20 per share to $19.10 to $20.10 per share. Amgen lowered the upper end of its EPS guidance range for the year as it expects R&D costs to increase and operating margins to be lower in the second half of the year
R&D costs are expected to increase more than 25% in 2024 compared to the prior expectation of approximately 25%. Adjusted operating margin is expected to be roughly 47% in 2024, with margin in the third quarter expected to be lower than the second-quarter level. In the third quarter, total adjusted costs are expected to rise at a similar rate to the first and second quarters.
The adjusted tax rate is expected to be in the range of 15.0% to 16.0%. Amgen raised its target for capital expenditures to approximately $1.3 billion from the previous expectation of $1.1 billion as it invests in manufacturing capacity for its obesity candidate, MariTide. Amgen expects to buy back shares worth not more than $500 million in 2024.
Pipeline Update
Top-line 52-week data from the phase II study on GLP-1 receptor candidate, MariTide in adults with overweight or obesity is expected in late 2024. Amgen is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes. Amgen plans to begin a phase II study on the candidate in type II diabetes in late 2024. Amgen has some obesity candidates in preclinical development that consists of both oral and injectable incretin and non-incretin approaches. One of these programs is expected to enter clinical development later in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted -6.86% due to these changes.
VGM Scores
Currently, Amgen has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amgen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Amgen is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Biogen Inc. (BIIB - Free Report) , a stock from the same industry, has gained 2.6%. The company reported its results for the quarter ended June 2024 more than a month ago.
Biogen reported revenues of $2.46 billion in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $5.28 for the same period compares with $4.02 a year ago.
For the current quarter, Biogen is expected to post earnings of $3.82 per share, indicating a change of -12.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
Biogen has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Amgen (AMGN) Up 5.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Amgen (AMGN - Free Report) . Shares have added about 5.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amgen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Q2 Earnings & Sales Beat
Amgen’s second-quarter results were strong as it beat estimates for earnings as well as for sales.
Amgen reported second-quarter 2024 adjusted earnings of $4.97 per share, which beat the Zacks Consensus Estimate of $4.93. Earnings declined 1% year over year due to higher operating costs and higher interest expenses.
Total revenues of $8.39 billion beat the Zacks Consensus Estimate of $8.31 billion. Total revenues rose 20% year over year.
Total product revenues increased 20% from the year-ago quarter to $8.04 billion. Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 26% in the quarter while prices declined 3%.
Other revenues were $347 million in the quarter, up 14.5% year over year.
Twelve products, including Prolia, Repatha, Blincyto, Tezspire and Evenity, achieved double-digit volume growth in the quarter. Rare disease drugs, mostly Horizon’s products, added $1.1 billion in sales in the quarter. Excluding the contribution from Horizon, product sales grew 5% while volumes rose 10%.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.17 billion, up 13% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $1.1 billion as well as our model estimate of $1.08 billion.
Evenity recorded sales of $391 million in the quarter, up 39% year over year, driven by solid volume growth in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $367.0 million as well as our model estimate of $349.0 million.
Repatha generated revenues of $532 million, up 25% year over year. Repatha volumes rose 46% due to expanded formulary coverage in the United States. The volume growth was partially offset by lower prices due to higher rebates to support expanded access. Repatha sales beat the Zacks Consensus Estimate of $531.0 million and our model estimate of $521.1 million.
Hematology-Oncology
Xgeva delivered revenues of $562 million, up 6% year over year, driven by higher net selling prices. Xgeva sales beat the Zacks Consensus Estimate of $547.0 million while slightly missing our model estimate of $567.6 million.
Kyprolis recorded sales of $377 million, up 9% year over year, driven by volume growth in outside U.S. markets. Vectibix revenues came in at $270 million, up 9% year over year, driven by higher net selling price and volume growth. Nplate sales rose 12% to $346 million.
Blincyto sales increased 28% from the year-ago period to $264 million, driven by volume growth as the drug benefited from broad prescribing for patients with B-cell precursor acute lymphoblastic leukemia (ALL). The FDA granted approval to Blincyto as a frontline consolidation treatment for patients with Philadelphia chromosome-negative B-cell ALL in June.
Lumakras/ Lumykras recorded sales of $85 million in the quarter, up 10% from the year-ago period.
Imdelltra (tarlatamab), approved for pre-treated advanced small cell lung cancer (ES-SCLC) in May 2024, recorded sales of $12 million in the second quarter. On the conference call, Amgen said that it is encouraged by the early launch trends of Imdelltra in SCLC.
In oncology biosimilars, sales of Mvasi were $157 million in the quarter, down 20% year over year.
Inflammation
Sales of Otezla were $544 million in the quarter, down 9% due to lower selling price and unfavorable changes to estimated sales deductions, which offset the benefit from volume growth of 2%. Otezla sales missed the Zacks Consensus Estimate of $594.0 million as well as our estimate of $544.8 million.
Enbrel revenues of $909 million declined 15% year over year due to lower selling price. Enbrel sales missed the Zacks Consensus Estimate of $949.0 million as well as our estimate of $963.5 million.
Going forward, Amgen expects volumes to be flat for Enbrel while net selling price is expected to continue to decline including the impact from the IRA Medicare Part D price set by CMS.
Tezspire (tezepelumab) recorded sales of $234 million in the quarter, up 76% year over year, driven by volume growth. Tezspire volumes benefited from the uptake of the new self-administered, pre-filled, single-use pen formulation of the drug.
Amjevita/Amgevita sales were $133 million in the quarter, down 11% year over year.
Rare Disease
Amgen closed the acquisition of Horizon Therapeutics for $27.8 billion on Oct 6, 2023, which added several rare disease drugs like Tepezza, Krystexxa and Uplizna to its portfolio.
Tepezza, Krystexxa and Uplizna generated sales of $479 million, $294 million and $92 million, respectively, in the second quarter. Tepezza sales rose 8% year over year and 13% quarter over quarter, when compared to results from the legacy Horizon business. Similarly, Krystexxa rose 20% year over year and Uplizna rose 35% year over year.
Ultra-rare products acquired from Horizon generated revenues of $187 million in the quarter.
New drug Tavneos generated $71 million in sales in the second quarter compared with $51 million in the previous quarter. The drug’s 39% sequential growth was driven by new patient volume growth.
Established Products
Total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 21% year over year in the quarter to $591 million.
Operating Margins Decline
Adjusted operating margin declined 4.4 percentage points to 48.2% in the quarter.
Adjusted operating expenses increased 30% to $4.52 billion. R&D expenses rose 30% year over year to $1.42 billion due to higher spending on later-stage clinical programs. SG&A spending rose 36% to $1.69 billion, primarily driven by the addition of Horizon.
The adjusted tax rate was 14.9% for the quarter, a 1.5-point decrease from the year-ago quarter.
2024 Guidance
Amgen tightened its revenue guidance from a range of $32.5 billion to $33.8 billion to $32.8 billion to $33.8 billion. Amgen expects its fourth-quarter revenues to rise in a mid-single-digit range sequentially.
Adjusted earnings guidance was also tightened from a range of $19.00 to $20.20 per share to $19.10 to $20.10 per share. Amgen lowered the upper end of its EPS guidance range for the year as it expects R&D costs to increase and operating margins to be lower in the second half of the year
R&D costs are expected to increase more than 25% in 2024 compared to the prior expectation of approximately 25%. Adjusted operating margin is expected to be roughly 47% in 2024, with margin in the third quarter expected to be lower than the second-quarter level. In the third quarter, total adjusted costs are expected to rise at a similar rate to the first and second quarters.
The adjusted tax rate is expected to be in the range of 15.0% to 16.0%. Amgen raised its target for capital expenditures to approximately $1.3 billion from the previous expectation of $1.1 billion as it invests in manufacturing capacity for its obesity candidate, MariTide. Amgen expects to buy back shares worth not more than $500 million in 2024.
Pipeline Update
Top-line 52-week data from the phase II study on GLP-1 receptor candidate, MariTide in adults with overweight or obesity is expected in late 2024. Amgen is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes. Amgen plans to begin a phase II study on the candidate in type II diabetes in late 2024. Amgen has some obesity candidates in preclinical development that consists of both oral and injectable incretin and non-incretin approaches. One of these programs is expected to enter clinical development later in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted -6.86% due to these changes.
VGM Scores
Currently, Amgen has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amgen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Amgen is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Biogen Inc. (BIIB - Free Report) , a stock from the same industry, has gained 2.6%. The company reported its results for the quarter ended June 2024 more than a month ago.
Biogen reported revenues of $2.46 billion in the last reported quarter, representing a year-over-year change of +0.4%. EPS of $5.28 for the same period compares with $4.02 a year ago.
For the current quarter, Biogen is expected to post earnings of $3.82 per share, indicating a change of -12.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
Biogen has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.