Amgen, Inc. (AMGN) Earnings Prove It Should Be in Your Portfolio

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Amgen, Inc. (AMGN) has suffered with the rest of the biotech and big pharma industry over the last year, but remains one of the best names in the space.

AMGN Stock: Amgen Earnings Prove It Belongs in Your PortfolioWhile other large biotech and pharma companies have faced declining revenue due to the patent cliff, AMGN continues to grow at an impressive clip while being valued as a company that lacks growth. Amgen’s first-quarter report and full-year outlook all but confirmed the bullish sentiment for AMGN stock moving forward.

AMGN Clicks on All Cylinders

Amgen’s $5.5 billion in first-quarter revenue and $2.90 per share in profit were $200 million and 30 cents better than the consensus, respectively. In other words, Amgen’s first quarter was a big beat, with revenue growth 10% year-over-year and net income up 17%.

Furthermore, the company slightly upped full-year revenue guidance, and raised its midpoint EPS guidance from $10.80 to $11 per share. At AMGN stock’s current price, it is trading at only 14 times this year’s guided EPS. That’s very cheap for a company with revenue growth, strong margins, and a 2.5% dividend yield.

AMGN Stock Will Eventually Follow

Unlike many companies in the biotech and pharma space, Amgen’s business is not driven by one or two blockbuster products. Instead, its business is driven by a balanced effort across many drug types that treat many different types of patients.

In other words, it is a well-rounded biotechnology company.

The problem is that Amgen faces increased competition in key areas of focus, like dermatology, and an increase in pressure from biosimilars. Fortunately, Amgen has an arsenal of growth products whose performance overshadows that of its lagging products. These products include Prolia, Xgeva, Vectibix, Nplate, Sensipar and Enbrel, which combined to grow 20% year-over-year, accounted for more than half of Amgen’s total revenue with $3 billion in combined sales.

That said, AMGN has a handful of drugs within its portfolio that could single-handedly drive sentiment higher. Its rheumatoid arthritis drug Enbrel is an ongoing success, with $1.39 billion in revenue last quarter, and no signs of slowing down with 24% growth.

Prolia, which prevents bone fractures, does not have the sales of Enbrel at just $352 million last quarter, but it is growing fast at 29% annually, with company executives going on the record to predict continued growth in Prolia “for years.”

When you consider the growth of these two products, along with the value that lies in AMGN stock, it is rather obvious to see that yes, Amgen should outperform the biotech and market long-term.

A Catalyst to Monitor

Amgen is a company that will thrive as is, but investors must keep in mind what successful data in Amgen’s bad-cholesterol-lowering drug Repatha can do for AMGN stock.

Repatha is already approved to lower bad cholesterol, but it is also nearing the end in large studies to determine whether the drug prevents heart attacks. Early data has all been positive.

If data confirms what most of Wall Street believes, insurers will have no choice but to pay the large premiums associated with Repatha. While the drug totaled just $16 million during its first quarter available in the market, this is a drug that could easily top $4 billion in revenue long-term, and maybe more depending on the outcome of several studies.

Given this catalyst, and the fact that AMGN stock does not reflect this enormous upside, investors should view stock losses as an entry point into AMGN.

As of this writing, Brian Nichols owned shares of AMGN.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/04/amgn-stock-earnings-prove-portfolio/.

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