Amgen, Inc. AMGN will report second-quarter 2020 results on Jul 28, after market close. In the last reported quarter, the company delivered a positive earnings surprise of 12.7%.
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 8.42%, on average.
Amgen’s stock has risen 4.6% this year so far compared with an increase of 9.8% for the industry.
Factors to Consider
Amgen’s second-quarter performance is likely to have been significantly affected by COVID-19-related uncertainty.
In the second quarter, Amgen’s growth products like Prolia, Evenity, Repatha, Aimovig, Parsabiv and Otezla are expected to have driven sales.
However, decline in visits of patients to doctor clinics due to the lockdowns may have reduced new patient starts for some of its products due to delays in diagnosis and treatment in the second quarter. Particularly, sales of Prolia and Xgeva are expected to have been hurt due to disruptions in physician-patient interactions in the second quarter. However, COVID-19 may have benefited sales of Otezla as it provides a convenient oral formulation and is conducive to telemedicine.
Please note that Otezla was purchased by Amgen from Celgene in November 2019 as the latter had to divest the drug in order to complete its merger with Bristol-Myers BMY.
The respective Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Parsabiv, Repatha and Kyprolis sales is pegged at $522 million, $411 million, $91 million, $187 million, $236 million, and $276 million.
Also, increasing branded and generic competition for its legacy productslike Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar are likely to have hurt the top line. The Zacks Consensus Estimate for Enbrel sales is $1.23 billion.
Biosimilars may have once again been an important contributor to top-line growth driven by Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) and Mvasi (biosimilar of Roche’s Avastin), which were launched in the United States in 2019.
In May, Amgen had said that it is did not experience any disruption in the supply chain in the quarter. Also, key late-stage studies including AMG510, tezepelumab, and omecamtiv mecarbil were not impacted by COVID-19 with readouts expected as scheduled this year. However, some early-stage studies were interrupted and the company, back then, had said that it will re-start the studies as soon as possible. An update is expected on the second-quarter conference call.
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: Earnings ESP, which represents the difference between the Most Accurate Estimate of $3.39 and the Zacks Consensus Estimate of $3.68, is -7.87%. 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:
Incyte INCY with an Earnings ESP of +4.62% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pfizer PFE has an Earnings ESP of +1.04% and a Zacks Rank #3.
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