Biotechnology giant Amgen Inc. (AMGN) is scheduled to unveil its third quarter 2011 results on October 24, 2011. The Zacks Consensus Estimate for the third quarter is $1.26 (year-over-year decrease of 6.67%) on revenues of $3,870 million (year-over-year increase of 1.42%).
Second Quarter Flashback
Amgen reported second quarter earnings per share of $1.35, $0.05 above the Zacks Consensus Estimate and 0.7% above the year-ago earnings. Total revenues increased 4% to $3,959 million in the second quarter of 2011. Revenues topped the Zacks Consensus Estimate of $3,778 million.
US revenues increased 7% during the quarter to $2,975 million. Meanwhile, international revenues increased 11% to $918 million. Foreign exchange (Fx) fluctuation boosted revenues by $34 million during the second quarter. (Read our full coverage on this earnings report: Amgen Beats, Updates Outlook ).
Agreement of Analysts
Estimate revisions for Amgen have been scarce over the last 7 days. Only 2 analysts have revised earnings estimate for the Thousand Oak, California-based company, one in either direction. The lack of estimate revisions is prevalent even for fiscal 2011. The last 7 days has seen 2 analysts revising earnings estimates. Movements have been witnessed in both directions. We believe that most analysts are remaining on the sidelines prior to the earnings release and will adjust their estimates only after Amgen discloses its results.
Magnitude of Estimate Revisions
Estimates for the third quarter of 2011 have remained static at $1.26 over the last 7 days due to a lack of significant estimate revisions by the analysts following the stock. Estimates for fiscal 2011 have remained static at $5.09 over a similar time period due to lack of significant estimate revisions.
Amgen exhibited a positive earnings surprise trend over the last four quarters. The company recorded a minimum surprise of 2.33% in first quarter of 2011 while a maximum of 8.49% was witnessed in final quarter 2010. On an average, the earnings surprise was 5.65%.
Neutral on Amgen
We currently have a Neutral recommendation on Amgen, which carries a Zacks #3 Rank (short-term Hold rating). We expect investor focus to remain on the successful commercialization of osteoporosis drug Prolia/Xgeva, which is the future of Amgen.
Amgen has a collaboration agreement with GlaxoSmithKline (GSK) whereby both companies will share commercialization of Prolia for osteoporosis indications in Europe, Australia, New Zealand and Mexico. Glaxo also has the right to commercialize the drug for all indications in countries, excluding Japan, where Amgen does not have a commercial presence, including countries like China, Brazil, India, Taiwan and South Korea.