Investors' Focus Around Amgen's Obesity Drug Data Shadows Better Than Expected Q4 Earnings

Tuesday, Amgen Inc AMGN reported its fourth quarter 2023 adjusted net profit increased 15% to $4.71, beating the consensus of $4.62, driven by increased revenues, partially offset by higher operating expenses.

For the fourth quarter, total revenues increased 20% to $8.2 billion, beating the consensus of $8.13 billion. 

Product sales grew 20%, driven by 23% volume growth, partially offset by a 3% lower net selling price. The performance included $954 million of sales from the recent Horizon Therapeutics acquisition between October 6 and December 31.

Product sales were led by a 12% jump to $1.1 billion for the osteoporosis drug Prolia. Sales of the rheumatoid arthritis drug Enbrel fell 8% to $1 billion.

Excluding Horizon’s medications, Amgen’s product sales grew 5% on volume growth of 9%.

Also Read: Full Approval For Amgen’s Flagship Cancer Drug Lumakras Pushed For Around Four Years.

Guidance: Amgen expects adjusted EPS of $18.90-$20.30 versus consensus of $20.00.

The company sees revenue of $32.4 billion-$33.8 billion compared to the consensus of $32.66 billion.

Investors are focused on Amgen’s experimental weight loss drugs. The company said it is on track to report the Phase 1 study data from the obesity drug AMG786 in the first half of 2024 and to announce results from the Phase 2 study of Maridebart cafraglutide (AMG 133) in late 2024.

Analyst Reaction: 

• RBC Capital increased Amgen’s price target from $303 to $329 with an Outperform rating, reflecting fiscal updates and annual guidance. The analyst acknowledges the favorable outlook on obesity after MariTide’s Phase 1 data release and the potential for further extensive program investigation.
• Baird raised the price target from $185 to $215 with an Underperform rating. The analyst notes that AMG 133 appears to be the main catalyst behind the recent surge in the past six months. Despite this, the outlook remains pessimistic on stock performance, and the latest market activity is perceived as relatively inconsequential.
• BMO Capital analyst notes that long-term investors are directing their attention towards the Horizon Therapeutics integration, anticipating benefits such as cost synergies and accretion in the current year. It reiterated Outperform rating with a price target of $343.
• Goldman Sachs expects shares to continue to outperform given the value proposition Amgen offers with earnings execution, product cycles, and a broad pipeline with a steady cadence of catalysts in 1 half year of 2024 and beyond.

Price Action: AMGN shares are down 4.88% at $300.64 on the last check Wednesday.

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