Leerink Partners Remains Sidelined on Amgen (AMGN) Following 2Q
Leerink Partners reiterated a Market Perform rating on Amgen (NASDAQ: AMGN), and raised the price target to $201.00 (from $186.00), following the company's 2Q earnings report. AMGN reported total revenues of $5.69bn, beating consensus by 3%. The company also reported an operating margin of 51% on expenses of $2.876bn, which was in-line with consensus.
Analyst Geoffrey C. Porges commented, "Amgen Reported Q2 Results Beating Consensus for Revenue by 2% and Beating by 3% on EPS. Total revenue of $5.69bn included $5.474bn in product sales that beat consensus by 3% and missed our estimate by -2%. As with the previous quarter, the main driver of the revenue upside was annual net price increases and inventory build of Enbrel, which beat consensus by 5% but missed our estimate by -4%. Epogen also declined less than expected and beat consensus by 8% and our estimate by 5%. In the rest of the portfolio, Prolia and Sensipar beat consensus by 14% and 4%, respectively. Results were disappointing for Kyprolis, which missed consensus by -5%, and Neupogen revenue eroded to competition quicker than anticipated for a reported -8% miss. Comparatively, overall revenue growth was 6% against Q2 2015 and 3% against Q1 2016. Total product sales grew 5% yoy and 4% qoq, and the annual growth was driven solely by net price increases of 6% across the portfolio offset by inventory changes of -1%. Individual products, such as Prolia, Kyprolis, and Sensipar contributed strong annual demand growth, but on balance the loss of market share to competitors in the legacy product portfolio kept overall volume flat year-over-year. For instance, Neupogen declined -23% yoy and -8% qoq, while Neulasta declined -1% yoy and -3% qoq due in part to inventory fluctuations. Enbrel reported 10% yoy growth on a calculated 14% price increase (realized), while sequentially all of Enbrel’s 7% growth was contributed by an inventory build. With the balance of volume shifting as the legacy portfolio faces steeper competition, Amgen’s growth portfolio now represents 50% of product sales. Of these growth products, Prolia reported an increase of 30% yoy and 25% qoq, much of which was driven by organic demand growth, although Q2 seasonality tends to benefit sequential comps. Xgeva grew 15% yoy and 1% qoq, but was affected sequentially by a large end customer purchase in the prior quarter. After the quarter’s results, our price target (PT) goes to $201 from $186 and we maintain our Market Perform rating."
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Shares of Amgen closed at $170.68 yesterday.