Amgen (AMGN) To Report Q3 Earnings: What's In The Cards?

We expect Amgen Inc. (NASDAQ:AMGN) to beat expectations when it reports third-quarter 2019 results on Oct 29 after market close. Amgen delivered positive earnings surprise of 10.89% in the last reported quarter.

Amgen shares rose 4.3% this year so far against 2.5% decrease registered by the industry during this period.

Amgen’s performance has been impressive, with the company delivering a positive surprise in each of the trailing four quarters with the average being 6.72%.

Amgen Inc. Price and EPS Surprise

Amgen Inc. price-eps-surprise | Amgen Inc. Quote

Factors at Play

Higher sales of products like Prolia, Xgeva, Kyprolis and Blincyto are expected to have made up for lower sales of Amgen’s mature drugs like Enbrel, Aranesp, Epogen, Neupogen, Neulasta and Sensipar that face an array of branded and generic competitors. The Zacks Consensus Estimate for Enbrel sales is $1.27 billion.

Sales of Prolia, Xgeva, Blincyto, Parsabiv, Kyprolis and Nplate are likely to have been driven by higher demand trends once again.

The respective Zacks Consensus Estimate for Prolia, Xgeva, Blincyto, Parsabiv and Kyprolis sales is pegged at $638 million, $484 million, $75 million, $178 million and $270 million.

Biosimilars may have once again being an important contributor to top-line growth. Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) and Mvasi (biosimilar of Roche’s Avastin) were launched in the United States in July, which are likely to have contributed to third-quarter sales.

Though Repatha sales are expected to have gained on higher unit demand, lower prices are likely to have acted as an offsetting factor. The Zacks Consensus Estimate for Repatha sales stands at $169 million.

Amgen’s new migraine drug, Aimovig, recorded sequentially improved sales in the second quarter driven by an increase in the percentage of paid volume as the company sees improvement in conversion of free-to-paid patients. We expect the positive trend to have continued in the third quarter.

Another important drug, Evenity was launched in the United States and Japan this year for the treatment of osteoporosis in postmenopausal women at high risk of fracture. Investors will be keen to know how Aimovig and Evenity performed in the third quarter.

In August, Amgen entered into an agreement to acquire global commercial rights to Celgene’s (NASDAQ:CELG) blockbuster psoriasis drug, Otezla, which the latter had to divest to complete its impending merger with Bristol-Myers (NYSE:BMY) . Amgen agreed to pay Celgene $13.4 billion in cash or approximately $11.2 billion net of anticipated future cash tax benefits for Otezla and certain related assets and liabilities. An update is expected at the call.

Earnings Whispers

Our proven model predicts an earnings beat for Amgen in the soon-to-be-reported quarter because it has the right combination of two key ingredients. 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.

Earnings ESP: Amgen’s Earnings ESP is +0.50% as the Zacks Consensus Estimate of $3.50 is lower than the Most Accurate Estimate of $3.51. 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

Here’s another large biotech stock that has the right combination of elements to beat on earnings this time around:

Regeneron Pharmaceuticals (NASDAQ:REGN) with an Earnings ESP of +5.65% and a Zacks Rank #3. The company is scheduled to release results on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

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