On Aug 21, Zacks Investment Research upgraded Amgen Inc. (AMGN) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Amgen came out with strong second quarter results and an improved outlook for 2014 on Jul 29. The biotech company’s earnings track record is impressive with the company delivering positive earnings surprises in the last 4 quarters with an average beat of 11.1%. The long-term expected earnings growth rate for this stock is 7.2%.
Amgen’s second quarter 2014 results were impressive with earnings per share coming in at $2.37, well above the Zacks Consensus Estimate of $1.99 and the year-ago earnings of $1.88. Total revenues, which increased 11% to $5,180 million, also surpassed the Zacks Consensus Estimate of $4,875 million.
Amgen upped its 2014 guidance and now expects to earn $8.20 – $8.40 per share on total revenues of $19.5 billion – $19.7 billion. Earlier this year, the company had guided towards earnings of $7.90 – $8.20 per share on total revenues of $19.2 billion – $19.6 billion.
In addition to presenting second quarter results, Amgen announced a restructuring plan which will see the company cutting 2,400-2,900 positions (12% – 15% of the total work force) starting later this year and continuing through 2015. The job cuts will mostly be in the U.S. While Amgen will close its facilities in the states of Washington and Colorado, it will expand its presence in the biotech hubs of South San Francisco, CA and Cambridge, MA. The company’s restructuring plan should make it leaner and more cost-efficient.
Meanwhile, Amgen continues to progress with its pipeline. Earlier in the month, the company announced positive encouraging data from the phase III ASPIRE (CArfilzomib, Lenalidomide, and DexamethaSone versus Lenalidomide and Dexamethasone for the treatment of PatIents with Relapsed Multiple MyEloma) study on multiple myeloma treatment, Kyprolis. Kyprolis achieved the primary endpoint of the study – progression free survival.
Kyprolis became a part of Amgen’s portfolio following its Oct 2013 acquisition of Onyx Pharmaceuticals, which strengthened its presence in the oncology market. Amgen intends to file for regulatory approval on the basis of the ASPIRE data in the first half of 2015.
The company remains on track to file for approval of evolocumab (cholesterol management) in the third quarter. Amgen has already filed for regulatory approval of ivabradine (chronic heart failure).
Other Stocks to Consider
Apart from Amgen, Cambrex Corp. (CBM), China Biologic Products, Inc. (CBPO) and Gilead Sciences Inc. (GILD) also carry a Zacks Rank #1 (Strong Buy) and are worth considering.
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