Amgen’s Stock Up 15% on Earnings
There may be a lot more smiling faces than usual around Thousand Oaks this week.
Shares of Amgen Inc., the biotechnology giant based in that Conejo Valley city, rocketed 15% on Wednesday to an all-time high after the company late Tuesday reported stronger-than-expected second-quarter earnings.
The stock soared $10.65 to $81.17, eclipsing the previous peak of $80.43 reached in 2000. The price is up 26.5% this year, whereas the Nasdaq composite stock index, which includes Amgen, is barely positive, up 0.6%.
The second-quarter earnings report reassured investors who were concerned that Amgen’s profit growth was slowing, said SG Cowen & Co. analyst Eric Schmidt. The company’s new forecast for a 2005 profit of as much as $3.20 a share, excluding some items, would be an increase of as much as 33% from last year.
“People had just forgotten and ignored Amgen for going on two years, and all of a sudden they beat expectations and raised guidance and gave people a reason to come back and reinvest,” said Jon Fisher, who helps manage about $21.7 billion at Fifth Third Asset Management in Minneapolis.
“You’ve got a mass of dollars and a mass of investors piling into the stock all at once,” he said -- which in turn is enriching many Amgen workers who own the stock via options or the company’s retirement savings plan.
Amgen’s share gain boosted the 25-year-old company’s market value to $100.4 billion, putting it once again ahead of Genentech Inc. as the biotech industry’s leader in capitalization. Genentech’s market value had passed Amgen’s earlier this year but stood at $94.5 billion on Wednesday.
Amgen Chief Executive Kevin Sharer said Tuesday that the company was able to raise its profit forecast because revenue from the drug Aranesp, used to treat anemia in cancer patients, hadn’t been eroded by changes this year in the way the Medicare program for the elderly and disabled reimbursed doctors.
“We always believed that reimbursement was a manageable concern,” said Kris Jenner, a fund manager at T. Rowe Price Group. “For the person who was sitting on the fence, though, they really felt like they heard an all’s-clear sign.”
Sales of Aranesp jumped 36% to $837 million in the second quarter, Amgen said. That helped push net income up 38% to $1.03 billion, or 82 cents a share, from $748.1 million, or 57 cents, a year earlier. Revenue rose 23% to $3.17 billion.
Amgen, which built its business on drugs that boost patients’ white or red blood cell counts, disclosed more details Tuesday about its testing programs. The firm said it had enrolled almost 8,000 patients in a Phase III study of its AMG 162 osteoporosis drug, which some analysts say is Amgen’s most promising product in the pipeline. The Food and Drug Administration usually requires three phases of tests before reviewing a drug for approval.
The company also said it might release early research assessing Aranesp’s benefit among some heart-failure patients later this year, which could lead some physicians to prescribe the drug for that use, said Christopher Raymond, an analyst at Robert W. Baird & Co. in Chicago.
