Biotech company Amgen (AMGN) provided positive outlook for the year 2012 after its quarterly earnings failed to meet analysts' expectations hurt by rising costs. However, the company's revenue for the fourth quarter is in line with the Street consensus. The results come on the heels of the company agreeing to buy Micromet for $11 a share or $1.16 billion for strengthening its research for cancer drugs.
The company will be releasing clinical data for four studies in 2012 including Sensipar/Mimpara Phase 3 Evaluation of Cinacalcet Therapy to bring down Cardiovascular events trial and Phase 2 fracture healing studies.
Q4 Results
The Thousand Oaks, California-based Amgen reported 8.4 percent fall in net income to $934 million from $1.02 billion in the year-ago quarter, but earnings per share remained flat at $1.08. On an adjusted basis, net income slipped 5.5 percent to $1.04 billion from $1.1 billion, but earnings rose 3.4 percent to $1.21 a share from $1.17 a share in the year earlier quarter.
Total revenues grew 3.4 percent to $3.97 billion from $3.84 billion, while product sales increased 4 percent to $3.91 billion from $3.76 billion in the previous year quarter. While product sale from the U.S. grew 5 percent to $3.01 billion from $2.87 billion, product sales from International market rose 1 percent to $900 million from $891 million in the year-ago quarter. Excluding currency fluctuations, global sales would have advanced 4 percent and total products sale by 5 percent.
Wall Street analysts were expecting Amgen to deliver earnings of $1.22 a share on revenues of $3.91 billion.
The company's cost of sales grew to 16.5 percent of sales compared to 15.1 percent of sales last year. Excluding the unfavorable impact of Puerto Rico excise tax, it would have been 14.4 percent representing 60 basis points lower from the previous year quarter. The company bought back about 86 million shares for a value of $5.2 billion during the fourth quarter.
Outlook
Moving ahead, Amgen guided adjusted earnings of $5.90 - $6.15 a share on revenues of $16.1 - $16.5 billion for the year 2012. The company sees adjusted tax rate to be 14 – 15 percent for the same period. Excluding Puerto Rico excise tax, the company guided adjusted tax rate of 19 – 20 percent.
Street analysts are predicting the company to earn $5.94 a share on revenues of $1.05 billion.
The company is hoping to carry the momentum even further in the year 2012 and believes that Micromet acquisition would further help its pioneering oncology therapeutics pipeline and capabilities.
Our Take
The company's outlook offers positive sentiments, but their cost of sales remains a concern. If it could make some more efforts to limit costs, it could yield better margins and profitability. The stock is treading nearer to the 52-week high. The stock is not on the Sell radar.
