Amgen Earnings Reaction Close To All-Time Highs!

Amgen Inc. (NASDAQ: AMGN) today announced financial results for the second quarter of 2012.  The biotech giant’s results showed a 13% revenue gain to $4.5 billion and adjusted earnings rose 34% to $1.83 per share.  Thomson Reuters was looking for $1.54 EPS and $4.08 billion in revenue.

What is more important is that Amgen is raising its 2012 total revenue and adjusted earnings guidance to $16.9 billion to $17.2 billion and it is now targeting earnings of $6.20 to $6.35 per share.  Thomson Reuters has estimates of $6.15 EPS and almost $16.4 billion in revenue.  The new range is effectively above the consensus even at the lowest points.

Amgen claimed that it saw 8 percent product sales growth driven by strong performance across the portfolio.  The company has also modified agreement with Takeda to grant exclusive worldwide development rights for Motesanib, recognizing income of $206 million in other revenues.   We would note that the share repurchase activity has lowered the share count and that may be part of the adjusted earnings gains.  Amgen generated approximately $2.2 billion of free cash flow in the quarter.  We would make note that Amgen still has close to $22 billion in long-term debt.   As far as the pipeline news coming soon, Amgen noted, “Four AMG 145 Phase 2 studies have successfully completed and the Company plans to initiate Phase 3 development in early 2013.”

Amgen closed up .7% at $79.29 and shares are up over 4% at $83.15 after the news.  Keep in mind that the 52-week high was $80.25 and the stock hit $80.00 earlier today.  The Thomson Reuters consensus price target was almost $76.00 going into the news, but we would expect that target to be raised Friday and next week as analysts ratchet up their expectations.

Be advised that the unadjusted high price from 2005 was $86.92 and that was six years or more before the dividend came into play.

JON C. OGG