Amgen Forecasts a Slowdown in Earnings Growth in 2004
Biotechnology giant Amgen Inc. said Monday that its growth engine would cool next year from the torrid pace of 2003, despite continued strong sales of its key injectable drugs.
The Thousand Oaks-based company also said it would end 2003 with earnings at the midpoint of $1.85 to $1.95 a share. Analysts had expected results at the top of that range.
For 2004, Amgen said it expected adjusted earnings of $2.30 to $2.40 a share -- a growth rate in the low-to-mid 20% range -- on revenue of $9.7 billion to $10.4 billion. Analysts’ mean forecast had called for earnings of $2.39 a share next year.
Chairman and Chief Executive Kevin Sharer said 2004 would nonetheless be a strong year for Amgen, a marketer of drugs for anemia and other diseases. “Our fundamentals are solid,” he said.
The company said its second-generation anemia drug Aranesp and its rheumatoid arthritis drug Enbrel would post solid gains in 2004. It also said sales of Aranesp and another anemia drug, Epogen, would range between $4.6 billion and $5.1 billion in total.
The pace of sales of medications for chemotherapy-related infections will cool somewhat in 2004, Amgen said. Sales of those medications will range between $2.7 billion and $3 billion, the company said.
Sharer said 2003 will rank among Amgen’s strongest years ever, with $7.8 billion in revenue, up from $3.6 billion in 2000. Adjusted earnings per share for 2003 would be up 35% from 2002, he said.
“How many $8-billion companies are growing like we are?” Sharer said in an interview.
Analysts’ mean forecast for 2003 earnings is high because it does not reflect an $86.5-million fourth-quarter expense related to a drug licensing deal with Biovitrum, a Swedish company, Sharer said.
Eric Schmidt, an analyst at S.G. Cowen, said Amgen’s forecast for 2004 was solid and probably conservative.
“They had a blowout ’03. No one in their right mind would expect that to continue,” he said.
Geoffrey Porges of Sanford C. Bernstein & Co. said 2004 would mark the beginning of a period of slower growth for Amgen. He said 5% of Amgen’s earnings-per-share gains next year would be fueled by a lower tax rate and a $5-billion share repurchase program, which also was announced Monday.
Porges said there was little in Amgen’s near-term drug pipeline to make up for slowing sales growth of the firm’s chemotherapy-related drugs, Neupogen and Neulasta.
“It feels like the growth engine is slowing down,” he said.
Amgen stock rose 30 cents to $59.73 on Nasdaq. The price fell to $58.70 in after hours trading, following the release of the company’s outlook.
