The Street Can't Help but Love Amgen
NEW YORK ( TheStreet) - With so many well-managed biotech names out there like Medtronic
Although Amgen's cancer drug Neulasta has been a huge success, analysts have done nothing but complain that Teva Pharmaceuticals
But here's the thing; these and other concerns have been around for the past 12 to 18 months. Yet, during that span, shares of Amgen, which have climbed almost 90%, have soared on the wave of excitement generated by these same Pharma and biotech rivals that have worried the Street with potential attacks.
Essentially, these worries about Amgen's lack of competitive position have had the opposite effect. And following Amgen's $125-per-share acquisition of Onyx Pharmaceuticals
In that regard, given the company's better-than-expected third-quarter earnings results, which sent shares soaring to a record high, the sky's now the limit for this company. Revenue was up 10% year over year to $4.75 billion, which beat analyst expectations of $4.58 billion. While it's true that a government order worth $155 million was a key contributor in the quarter, I was nonetheless impressed by the balance shown in Amgen's portfolio of products.
Both Neupogen and Xgeva, which posted revenue growth of 50% and 41%, respectively, were by far the outperformers in the quarter with combined sales of almost $1 billion. Not to be outdone, although Prolia generated revenue of less than $180 million, it still represented year-over-year growth of 61%. All of which helped to offset the 10% decline in Aranesp, which came in at $497 million in total revenue.
While it's clear that management remains focused on growth, Amgen also demonstrated effective cost controls, including 20-basis-point decline in expenses. From an operational perspective, this level of fiscal awareness led to a 13% increase in adjusted net income, which led to a 27% year-over-year increase in earnings per share.
So while it might not appear as if Amgen's management is eager to return cash to shareholders in the form of buybacks and dividend increases, with key acquisitions like Onyx, it is clear that the company has figured out the right formula for share-price appreciation. As optimistic as I may be, I'm not suggesting that Amgen has solved its entire problem, especially from the biosimilars perspective.