Can Amgen's Earnings Keep Its Stock Soaring?

On Tuesday, Amgen (NASDAQ: AMGN  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Amgen has a strong reputation as a giant in the biotech field, having been a pioneer in the industry. Yet the company hasn't stopped striving for further growth as it pushes its efforts into promising new corners of the biologics market. Let's take an early look at what's been happening with Amgen over the past quarter and what we're likely to see in its quarterly report.

Stats on Amgen

Analyst EPS Estimate

$1.84

Change From Year-Ago EPS

14.3%

Revenue Estimate

$4.37 billion

Change From Year-Ago Revenue

8%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Amgen keep impressing Wall Street this quarter?
In recent months, analysts have only gotten more enthusiastic about Amgen's earnings prospects. They've raised their estimates for the just-ended quarter by $0.14 per share, with even more substantial boosts for both full-year 2013 and 2014 expectations. Investors have jumped on the bandwagon, sending shares soaring by more than 30% since mid-January.

Amgen has a huge presence in the biotech industry. Its Neulasta/Neupogen treatment for patients undergoing chemotherapy brings in the most revenue of any drug it sells, with $1.3 billion in worldwide sales just in the fourth-quarter of 2012 alone. Yet that dependence has raised patent-cliff concerns, as Neupogen will lose its exclusivity at the end of this year. Teva Pharmaceutical (NYSE: TEVA  ) has already made an agreement with Amgen to sell a biosimilar version of Neupogen beginning in November, and future efforts from other companies will inevitably bring sales down sharply next year and beyond.

To replace that lost revenue, Amgen has plenty of new prospects in the fire, with a particularly large stable of biologics in late-stage phase 3 trials. Rival Celgene (NASDAQ: CELG  ) arguably has a slightly better pipeline in that more of its trial results come in during 2013, but Amgen expects to get several sets of results this year and next, which could lead to an even larger stable of products for the company.

What's unclear, though, is whether Amgen will be able to sustain its impressive revenue growth. Amgen's profit margins have fallen dramatically in recent years, and as health-care reform laws take full effect, the company could continue to see more bottom-line pressure in the years to come.

In Amgen's earnings report, watch for the company to discuss the impact that a recent German regulatory review of drug prices could have on Amgen over the long term. Germany's cost-benefit assessment framework could eventually become a model for U.S. health-care cost management as well, and as a result, it's important for Amgen to tread carefully in demonstrating its products' medical benefits and cost-effectiveness.

As hot as Amgen is right now, every in-the-know biotech investor has an eye on Celgene. Shares have skyrocketed this year as the company outlined a plan to almost triple its profits in only a few years. But should you buy the story Celgene is selling? Make sure you understand the key opportunities and risks facing this company by picking up The Motley Fool's brand new premium report on Celgene. To claim your copy today simply click here now.

Click here to add Amgen to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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