Is Growth Priced into Amgen Stock after Earnings Beat?

Key Points

• Amgen recorded a double beat on earnings, with earnings coming in 3% lower on a year-over-year basis. 
• The company cited higher sales for many of its best-selling drugs on higher volume.  
• Amgen reported there is still no clear path to resolving its dispute with the FTC regarding its proposed acquisition of Horizon Therapeutics.  

Amgen Inc. NASDAQ: AMGN delivered a solid earnings report after the market closed on August 3. Shareholders hope the results will be enough to reverse the fortunes of AMGN stock, down 12% in 2023. 

But heading into earnings, analyst sentiment suggests that all the growth may already be priced into the biopharmaceutical company’s stock.

The headline numbers were solid enough. The company beat on both the top and bottom lines. Earnings of $4.49 were a few cents higher than the forecast for $4.46 EPS. 

On the top line, Amgen reported $7 billion in earnings, which was higher than the forecast for $6.6 billion. The company attributed the revenue beat to an 11% growth in volume which helped offset a 2% decline in net selling prices and slightly lower inventory levels. 

The revenue number was higher than in the same quarter last year. Amgen earnings, however, were 3% lower on a year-over-year basis.  

Revenue Up Across the Board 

When a biopharmaceutical company reports earnings, investors look to see where the revenue comes from. Not surprisingly, the most reliable biopharma stocks tend to have multiple drug candidates. 

If a company’s revenue is too dependent on one drug, it can be a warning sign for investors. That’s one reason AbbVie Inc. NASDAQ: ABBV has struggled in 2023. The company’s revenue is heavily dependent on its blockbuster drug, Humira. But this is the first year that Humira faces biosimilar competition. 

And one of the primary biosimilars comes from Amgen. In January, Amgen announced that AMJEVITA would be the first biosimilar to Humira to be commercially available in the United States. 

The U.S. Food & Drug Administration (FDA) approved AMJEVITA in 2016, but the patent thicket around Humira allowed Amgen to start selling the drug this year. The company reported 2% growth in quarterly sales. 

Amgen also reported strong results from one of its cancer drugs, Blincyto; an osteoporosis treatment, Evenity, and its migraine treatment, Repatha. 

One of the only concerns came in the results for its cancer drug LUMAKRAS, which were flat at $77 million instead of expectations for sales of $88 million. 

No Move on the Horizon Front? 

Another concern is that the company did not have positive news in its dispute with the Federal Trade Commission (FTC) over its proposed $28 billion acquisition of Horizon Therapeutics NASDAQ: HZNP. Amgen stated in the conference call following earnings that, to date, the FTC has ignored the company’s commitments to address the regulatory body’s concerns. 

Amgen continues to state that there are no competitive overlaps between the companies. Furthermore, the company has no incentives to bundle Amgen’s drugs with Horizon’s. 

Is AMGN a Buy or a Trade? 

AMGN stock rose about 1% after the earnings report, but investors always ask about the direction the stock will take after the earnings report. 

Heading into the earnings report, the put/call ratio for AMGN stock was 0.75%, suggesting slightly bullish sentiment. The heaviest call volume was on a price of around $240, which is 4% higher than the price as of the market close on August 3. The heaviest put volume was on a price of $225 which is 2% lower than the August 3 closing price of $230.70. 

That suggests that there isn’t much conviction for Amgen in either direction. The Amgen analyst ratings on MarketBeat reflect that. The analysts give the stock a consensus Hold rating with a price target of $249.12, approximately 8% higher than the closing price on earnings day. 

But while AMGN stock may not be an exciting trade, buy-and-hold investors may be able to add to their position. And even if they don’t, the stock rewards you for holding with a dividend that has increased by 60% in the last two years. It has a 3.69% yield and has increased for 11 consecutive years.