Amgen Inc. (AMGN) is set to report second quarter 2014 results on Jul 29 after the market closes. Last quarter, the company had posted a positive earnings surprise of 2.76%. The company recorded positive earnings surprises in the last four successive quarters with the four-quarter trailing average beat being 8.82%. Let's see how things are shaping up for this announcement.
Factors at Play
Products like Prolia, Xgeva and Neulasta should continue performing well. However, sales of blockbuster drug, Aranesp, will remain under pressure due to lower demand. Competition and price cuts in Europe are also expected to hamper Aranesp revenues. As the company continues to invest in its late-stage pipeline, rising research and development costs will have a negative impact on the company’s bottom line.
Earnings Whispers?
Our proven model does not conclusively show that Amgen is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Amgen’s Most Accurate estimate stands at $1.93 while the Zacks Consensus Estimate is $1.99. Hence, the difference stands at -3.02% for the company.
Zacks Rank: Amgen’s Zacks Rank #3 (Hold) when combined with a negative ESP, makes surprise prediction difficult.
We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements.
Teva Pharmaceutical Industries Ltd. (TEVA) has an earnings ESP of +6.67% and carries a Zacks Rank #2. It is expected to report second-quarter results on Jul 31 before the market opens.
Endo International (ENDP) has an earnings ESP of +1.11% and carries a Zacks Rank #2. Endo will report second quarter earnings on Jul 31 before market open.
Impax Laboratories (IPXL) has an earnings ESP of +26.83% and holds a Zacks Rank #3. Impax will report second quarter earnings on Aug 6 before market open.
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