Amgen Inc.
Amgen is a leading biotech company, looking at new solutions for health-related issues. While they have enjoyed success and solid growth and are reasonably diversified, they are attractively priced (at 14X trailing EPS) because investors are worried about their largest product which comprises about 25% of their total revenues. They have a solid pipeline for future growth and their balance sheet is strong.
Ests: 4Q19 1Q20 FY19 FY20
Revs 6.1b 6.1b 23.2b 25.5
EPS 3.46 3.93 14.63 16.14
P=226.15, div=6.40, yield=2.8%, D/C=68% due to share repurchases and Otezla acquisition, 9bn in gross cash, 21bn in net debt, TTM EPS=14.60, TTM P/E=14X, balance sheet is ok, solid cash flow generator with flexibility to repay debt and return cash to shareholders.
4Q19 3.64 vs 3.42 +6%, est 3.46 up from 3.36, FY19 EPS 14.82 vs 14.40
Jan 30, 2020, P=226.15, TTM EPS=14.82, P/E=15X, FY20 P/E=15X guidance midpoint
Revs -1% to 6.2bn (volumes +3%, ASPs -4%) , OM 44.6% vs 45.3%, OpInc -4% to 2.6bn
Revs of declining produces -945m or 38% to 1.56bn, Revs of growing products +825m or +24% to 4.3bn (including 178m from acquired Otezla), Total Products -2% or 120m to 5.9bn
FY19 volumes +3%, +19% ex US, ASPs -5%
FY20 Guidance: Revs 25-26bn (+6.8-11%, flat plus Otezla)), adj EPS 14.85-15.60 (flat to +5%), est 16.14 which is up from 15.88, expect ASPs down low to mid-single digits, volumes to offset lower prices, expect competition in their royalty product portfolio, OpEx up low double-digits on growth investments
Guidance softer than estimates and also soft on absolute basis, looks like EPS contribution from Otezla barely offsets investments and headwinds (ASP declines) but could still dovetail into a solid FY21, probably too early for mgmt. to give indications.
D/C now 68% after Otezla acquisition, FY19 FCF was 8.5bn vs 10.6bn due to unfavourable changes in WC, advance tax payments, and lower net income. Still solid capacity to reduce debt.
Dec 11, 2019
Raised dividend 10% to 6.40, yield=2.7%
3Q19 3.66 vs 3.69 -1%, est 3.53
Oct 29, 2019, P=208.99, TTM EPS=14.60, P/E=14X
Revs -3% TO 5.7bn, OM 51.1% vs 53.9%, OpInc -6% due to higher R&D
Volumes +3%, ASPs -4%
Revs of declining products -716m or -30.5%, Revs of growing products +669m or +21% (70% of product sales vs 57%), Total products -1% to 5.46bn
Ending neuroscience research and early development programs except for neuro inflammation which will be pursued by their inflammation Therapeutic Area.
FY Guidance: Raised, Revs 22.8-23bn, EPS 14.20-14.45 not including Otezla acquisition, implies 4Q EPS 3.02-3.27 (-12% to -4%, est 3.36)
Early indications for FY20: GM similar to 2019, R&D +500m, SG&A up due to Otezla acquisition plus int’l expansion (including Japan and China), growth of biosimilars, investments to exceed benefits from productivity initiatives.
Results and guidance better than anticipated despite guidance for 4Q EPS down y/y, volume growth is encouraging, I’d expect in the next few quarters ASP decline should moderate unless they keep cutting ASPs. Acquisition of Otezla should benefit FY20 results, currently not clear whether that will offset their investments and what they expect for ASPs and volumues.
2Q19 3.97 vs 3.83 +4%, est 3.59 down from 3.66
July 30, 2019, P=176.45, TTM EPS=14.63, P/E=12X, FY20 P/E=12X
Revs -3% to 5.9bn, OM 50.6% vs 51.8%, OpInc -5%, COGS -1%, R&P +%, SG&A -6%
Revs of declining products -656m or 27%, Revs of growing products +551m or +16.9% (68% of product sales vs 57%), Total products -2% to 5.57bn
FY Guidance: Revs 22.4-22.9bn, EPS 13.75-14.30 (raised bottom end of both), implying 2H EPS down y/y.
Mgmt encouraged with progress of pipeline.
1Q19 3.56 vs 3.47 +3%, est 3.48 up from 3.63
Apr 30, 2019, P=179.32, TTM EPS 14.49, P/E=12X, FY19 P/E=13X
Revs flat at 5.6bn, OM 49.8% vs 54.7%, OpInc -8.8 on higher COGS due to mix and mfng costs, R&D +16% on support of early stage pipeline and oncology programs (expect FY19 R&D up single digits) and SG&A +5% on product launch investments (expect FY19 SG&A down y/y)
Revs of declining products -513m or -20.9% to 1.94bn, Revs of growing products +456m or +15.8% to 3.3bn (63% of product revs), Total Products -1% with units +5% and channel inventory -3%
Outside of US, unit volumes +15% as new product growth more than offset declines from mature brands and biosimilar competition
FY19 Guidance slightly raised bottom end: Revs 22-22.9bn, EPS 13.25-14.30
“advancing record number of first-in-class molecules targeting significant areas of unmet need”
Conference call comments to follow.
4Q18 3.42 vs 2.89, +14%, est 3.28, FY18 EPS 14.40 vs 12.58
Jan 29, 2019, P=192.11, TTM EPS=14.40, P/E=13X
Revs +7% to 6.2bn, OM 45.3% vs 45.9%, OpInc +6%
Revs of declining products -182m to -7.9% to 2.13bn, Revs of growing products +614m or +18.8% to 3.9bn (65% of product revs) but FY18 declining products -924m or -6.8% to 12.7bn, growing products +1.7bn or +20% to 9.8bn (43% of product revs)
FCF 10.6bn vs 10.5bn
FY19 Guidance: Revs 21.8-22.9bn (-8% to -3.3%, est 22.9bn), EPS 13.10-14.30 (-9 to -0.7%), est 14.62
Guidance factors continued growth from newer products in addition to potential challenges including further generic competition to Sensipar, continued competitive dynamics for Enbrel and competition against Aranesp and Neulasta (all combined 58% of FY18 product revs)
FY18 generated double-digit volume growth while product revs +3% (prices declined 1% and expect FY19 prices to decline mid-single digits), sounds like 1Q will be more negatively impacted due to some tough y/y comps.
Mgmt very excited about R&D product pipeline
Solid beat for 4Q but guidance is weak and light (reflecting my comment last quarter that headwinds could intensify), could be conservative on some of the uncertainties, pipeline could deliver significant value.
3Q18 3.69 vs 3.27, +13%, est 3.45
Oct 30, 2018, P=189.08, TTM EPS=13.88, P/E=14X, FY19 P/E=13X
Revs +2% to 5.9bn, OM 53.9% vs 55.6%, OpInc -2%, NI flat, EPS +13% on lower share count
Revs of declining products -295m or -7.6% to 3.57bn, Revs of growing products +352m or +22% to 1.94bn
R&D +6%, SG&A +11% due to product launches and marketing support
FCF 3.1bn vs 3.3bn
Guidance: raised Revs to 23.2-23.5bn, raised EPS to 14.00-14.25 (est 14.02)
In early stages of several product launches
Lowered list price of Repatha (currently ~2% of total revs) as many patients faced high co-pay expenses, should lower those payments and reduce abandonment driving volume but will impact near-term revs
Mgmt is excited about their development pipeline in oncology, cardio, and their neuroscience collaboration with Novartis, in addition to their Biosimilars program
Decent results, EPS continues to be driven by tax rate and lower share count but raised revenue guidance indicates confidence in new and growing products although 2019 could see higher headwinds (my comment, not mgmt.)
2Q18 3.83 vs 3.27, +17%, est 3.54
July 26, 2016 P=194.05, TTM EPS=13.46, P/E=14X,
Revs +4% to 6.1bn, OM 55.1% vs 55.2%, OpInc +2% on continued spending for growth, NI+5%, EPS +17% on lower share count
Revs of declining products -311m or 10.9% to 2.55bn, Revs of growing products +416m or 15.3% to 3.13bn,
US Revs -0.4% to 4.4bn, ROW +10.4% to 1.3bn, +9% ex fx with volume +14%
FCF 1.9bn vs 2.1bn
Guidance: FY18 Raised Revs 22.5-23.2bn, Raised EPS to 13.30-14.00 (est 13.75)
1Q18 3.47 vs 3.15, est 3.24
Revs +2% to 5.6bn, OM 54.7% vs 54.8%, OpInc +1%
New products contributing to growth, expect further growth with U.S. launch of Aimovig in 2Q and EU launch of AMGEVITA later this year.
Revs of declining products -259m or 7.8% to 3.06bn, Revs of growing products +403m or 21.4% to 2.28bn
Repurchased 10.8bn of stock in Dutch Auction
Ex-U.S +7% ex fx, 9% volume growth, growing faster than U.S. as majority of decline in mature brands is behind them, growth in newer products demonstrating growth potential.
FY18 Guidance: Revs 21.9-22.8bn, EPS 12.80-13.70 (est 13.48)
Decent results, attractive valuation.
4Q17 2.89 vs 2.89, est 3.03, FY17 EPS 12.58
Revs -3% to 5.8bn, OM OM 45.9% vs 50.5%, OpInc -11%
Raised dividend 15%, investing in US manufacturing, will accelerate share repurchases.
FY18 Guidance: Revs 21.8-22.8bn (est 22.8), EPS 12.60-13.70 (est 12.71)
3Q17 3.27 vs est 3.11 incl .07 hurricane hit
Revs -1% to 5.8bn, OM 52.5% vs 50.2%, OpEx -5.4%, OpInc +4%
FY17 Guidance: Revs 22.7-23.0bn, EPS 12.50-12.70, including .08-.11 hurricane costs in 4Q (.15-.18 for FY17)
Company feels they are making good progress towards their 2018 targets which they will discuss early next year.
2Q 173.27 vs 2.84, est 3.09
Revs +2% to 5.8bn, OM 52.9% vs 49.4%, , OpEx -5%, OpInc +9%
Enbrel was -1%
FY17 Guidance: Revs 22.5-23.0bn, EPS 12.15-12.65
Mgmt estimates that they have ~$140m of excess Enbrel inventory in the channel to be drawn down in 2H, not a huge drag
2Q 173.27 vs 2.84, est 3.09
Revs +2% to 5.8bn, OM 52.9% vs 49.4%, , OpEx -5%, OpInc +9%
Enbrel was -1%
FY17 Guidance: Revs 22.5-23.0bn, EPS 12.15-12.65
Mgmt estimates that they have ~$140m of excess Enbrel inventory in the channel to be drawn down in 2H, not a huge drag
1Q17 3.15 vs 2.90, est was 3.00
Revs -1% to 5.5bn (+3.4% ex Enbrel) slight miss to est 5.6bn, OM 57.6% vs 54.6%, Opinc +5%
Enbrel, 21.6% of total revs, revs -15%, mgmt. thinks it’s a short-term issue, very optimistic on cardiovascular drug Repatha
Repurchased 3.4m shares
FY17 Guidance: Revs unchanged at 22.3-23.1bn, EPS increased to 12.00-12.60 (est 12.35)
Revenue a bit softer than expected, EPS beat due to good cost control, stock selling off more than 3% in the after-market, stock had a good 34% run to mid-March and since had a nice pullback, stock still in sideways trend for last 2.5 years.