Amgen Inc. (AMGN) is set to report FQ4 2013 earnings after the market closes on Tuesday, January 28th. Over the past 6 quarters, AMGN has beaten Wall Street expectations for profit and revenue 5 times each and the stock is flying high.
Over the past 6 months Amgen stock is up 50%. Amgen is a biopharmaceutical company that has been experiencing rapid growth in both profit and revenue over recent quarters. This quarter the consensus from analysts is another strong quarter, but expectations are being represented by a wider range of estimates.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Amgen to report $1.68 EPS and $4.787B revenue while the current Estimize.com consensus from Buy Side and Independent contributing analysts is $1.77c EPS and $4.840B revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Amgen to beat Wall Street expectations on both profit and revenue.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a large differential between the 2 groups' forecasts.
Over the previous 2 years Amgen has established a fairly consistent track record of beating Wall Street expectations on profit. Amgen has beaten the profit forecast 6 out of the past 8 quarters and analysts on the Estimize.com platform are expecting them to do it again Tuesday. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors, Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market's actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The distribution of estimates published by analysts on Estimize range from $1.68 to $1.93 EPS and $4.692B to $4.981B in revenues. This quarter we're seeing a wider distribution of estimates compared to previous quarters.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.
The Wall Street EPS consensus dropped throughout the quarter from a starting point of $1.74 to $1.68. The Wall Street revenue also fell slightly throughout the quarter, from $4.795B to $4.787B. The Estimize EPS consensus sharply declined from $1.79 to $1.77 while the Estimize revenue consensus sank from $4.892B to $4.840B. Timeliness is correlated with accuracy and at the very end of the quarter we saw the revenue consensus from the Estimize community drop sharply going into the report.
The analyst with the highest estimate confidence rating this quarter is roncarp, who projects $1.77 EPS and $4.841B in revenue. In the Winter 2014 season, roncarp is currently ranked as the 245th best analyst and is ranked 298th overall among over 3,500 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated estimate is forecasting Amgen to beat both Wall Street and Estimize on both profit and revenue. roncarp is expecting more revenue but than less profit than the Estimize consensus.
Disclosure: No positions