Amgen profit beats Street, issues conservative 2016 forecast
Amgen Inc (AMGN.O) on Wednesday reported much higher-than-expected third-quarter profit, helped by a 30-percent spike in revenue from the rheumatoid arthritis drug Enbrel due to price increases and inventory stocking.
The world’s largest biotechnology company raised its full-year earnings forecast on the back of the strong quarter, and issued its first 2016 projections for adjusted earnings that fell short of current Wall Street estimates.
However, Amgen typically raises its forecasts over the course of the year.
Excluding some items, Amgen earned $2.72 per share in the quarter, topping analysts’ average expectations by 34 cents, according to Thomson Reuters I/B/E/S.
Its shares rose 1 percent in after-hours trading to $164.20.
For 2016, Amgen said it expected adjusted earnings of $10.35 to $10.75 per share and revenue of $21.7 billion to $22.3 billion. Analysts on average were looking for $10.76 per share and $22.17 billion.
Amgen said it will raise its quarterly dividend 27 percent to $1 per share.
“We expected Amgen to put up a good Q3 and they delivered,” said Cowen and Co analyst Eric Schmidt, adding that the 2016 forecast “looks pretty conservative.”
Revenue rose 14 percent to $5.72 billion, topping analysts’ estimates of $5.33 billion.
“The surprise here is the strong revenue numbers well above consensus, and the EPS well above, due in part to management of expenses,” said RBC Capital markets analyst Michael Yee.
The conservative 2016 forecast is likely due to higher tax rate projections, he said.
The company now expects full-year 2015 adjusted earnings of $9.95 to $10.10 per share. It nudged up the high end of its 2015 revenue forecast to $21.6 billion from $21.4 billion.
Sales of Enbrel jumped to $1.46 billion, topping analysts’ expectations of about $1.23 billion. But inventory stocking could spell lower fourth-quarter sales.
Amgen began to feel the pinch of competition from the first U.S. biosimilar to its Neupogen infection fighter. Sales declined 5 percent to $284 million.
However, longer lasting Neulasta saw sales rise 6 percent to $1.26 billion, topping expectations of $1.17 billion.
Amgen did not report sales of its potent new cholesterol fighter Repatha, which gained U.S. approval in August.
Tony Hooper, head of commercial operations, said feedback from doctors has been positive. “The understanding is there, the demand is there, the need is there.”
Amgen said net profit rose to $1.86 billion, or $2.44 per share, from $1.24 billion, or $1.61 per share, a year ago.