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AMGN Earnings Spotlight: Analyzing Potential Gains

Drug manufacturer Amgen Inc. (AMGN) is actively pursuing strategic collaborations and making noteworthy strides in the realm of obesity treatments. With the company all set to lift the curtains on its fiscal fourth-quarter earnings tomorrow, would it be prudent to take a bullish stance on the stock now? Keep reading to find out…

Boasting a strong market cap of $172.96 billion, Amgen Inc. (AMGN) specializes in the discovery, development, manufacturing, and distribution of human therapeutics worldwide. The company’s extensive product portfolio is dedicated to addressing diverse medical needs, spanning oncology, cardiovascular disease, and bone health.

AMGN is slated to announce its fourth quarter and full year 2023 financial results on Tuesday, February 6, 2024. Analysts project a significant 18.5% year-over-year growth for revenue to reach $8.11 billion in the fourth quarter. Similarly, the company's EPS for the same quarter is expected to climb 12.3% year-over-year to $4.59.

Meanwhile, during the third quarter, the company exhibited resilience, as reflected by upticks in both revenue and adjusted profits. Robert A. Bradway, the chairman and chief executive officer of AMGN, conveyed enthusiasm regarding the progress of the pipeline and the operational performance achieved in the third quarter.

Additionally, AMGN solidified its position as a leading healthcare provider across a wider spectrum of diseases with the acquisition of Horizon Therapeutics plc on October 6, 2023. By harnessing Horizon’s assets, AMGN aims to deliver innovative medications that significantly benefit patients grappling with severe illnesses.

On top of it, AMGN is strategically positioning itself to tap into the lucrative obesity market segment. Forecasts indicate that the obesity market is poised to exceed $100 billion by the end of the decade, fueled by consumer demand for treatments capable of reducing weight by up to 20%.

Given the solid demand, the drug maker is currently making advancements in the obesity space, with two therapies in its pipeline. Maridebart cafraglutide, previously known as AMG-133, is currently undergoing Phase II trials and the other therapy, AMG-786, is in Phase I trials. Also, AMGN is actively pursuing the development of six additional obesity medicines in the preclinical stage.

Furthermore, on December 12, 2023, AMGN declared a quarterly dividend of $2.25 per share, payable to its shareholders on March 7, 2024. The company’s annual dividend of $9 translates to a 2.78% yield on the prevailing price, while its four-year average dividend yield is 2.98%. Its dividend payouts have grown at a CAGR of 10% over the past three years. In addition, the company has a record of 12 years of consecutive dividend growth.

AMGN’s shares have rallied 40.3% over the past six months and 21.2% over the past three months to close the last trading session at $323.19.

Here are the fundamental aspects of AMGN that could influence its performance in the near term:

Strong Financials

AMGN’s total revenue for the fiscal third quarter (ended September 30, 2023) increased 3.8% year-over-year to $6.90 billion, while its non-GAAP operating income rose 3.8% from the prior-year quarter to $3.40 billion.

Moreover, the company’s non-GAAP net income and non-GAAP EPS came in at $2.68 billion and $4.96, up 5.4% and 5.5% from the year-ago value, respectively. During the same quarter, its total current assets stood at $48.48 billion, increasing 118.5% compared to $22.19 billion as of December 31, 2022.

Upbeat Analyst Estimates

The consensus revenue estimate of $28.11 billion for the fiscal year ending December 2023 represents a 6.8% improvement year-over-year. Meanwhile, the consensus EPS estimate of $18.54 for the same period reflects a 4.8% year-over-year surge.

Robust Profitability

AMGN’s trailing-12-month EBIT and levered FCF margins of 36.15% and 33.19% are significantly higher than the 0.16% and 0.13% industry averages, respectively. Its trailing-12-month Return On Common Equity (ROCE) of 133.80% compares to the industry average of negative 42.25%. Furthermore, the stock’s trailing-12-month EBITDA margin of 49.57% is 823.3% higher than the 5.37% industry average.

POWR Ratings Exhibit Solid Prospects

AMGN’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. AMGN has an A grade for Quality justified by its higher-than-industry profitability metrics. Moreover, the stock’s B grade for Stability is consistent with its 24-month beta of 0.47.

Within the Biotech industry, AMGN is ranked #12 out of the 349 stocks.

Beyond what we’ve stated above, we have also rated the stock for Growth, Value, Momentum, and Sentiment. Get all AMGN ratings here.

Bottom Line

AMGN is fortifying its position in the healthcare industry through significant acquisitions. Moreover, despite being a late mover in the obesity space, AMGN’s ongoing innovations hold the potential to be highly profitable for the company.

Additionally, the company’s attractive dividend yield, strong third-quarter performance, and optimistic analyst estimates further bolster AMGN’s appeal as an investment candidate. Therefore, as AMGN gears up to disclose its fourth quarter results tomorrow, it might be an opportune time to scoop up the company’s shares for potential gains.

How Does Amgen Inc. (AMGN) Stack Up Against Its Peers? 

While AMGN has an overall grade of A, equating to a Strong Buy rating, you may also check out these other stocks within the Biotech industry: Incyte Corporation (INCY), Otsuka Holdings Co., Ltd. (OTSKY), and Corcept Therapeutics Incorporated (CORT), carrying A (Strong Buy) ratings. To explore more Biotech stocks, click here.  

What To Do Next?

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3 Stocks to DOUBLE This Year >

AMGN shares were trading at $319.92 per share on Monday morning, down $3.27 (-1.01%). Year-to-date, AMGN has gained 11.08%, versus a 3.47% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Mukherjee

Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.


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