Pharma stock under pressure: Amgen, Inc. (NASDAQ: AMGN)

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Amgen, Inc. (NASDAQ: AMGN) stock fell over 3.3% in the pre-market session on 31st January, 2020 (as of  8:00 am GMT-5; Source: Google finance) after the company missed the earnings estimates for fourth quarter of FY 19 and its forecast 2020 earnings well short of Wall Street estimates. The company has reported fourth-quarter net income of $1.7 billion compared to $1.93 billion, in the year-ago period. The sales of older drugs such as white blood cell booster Neulasta and kidney drug Sensipar have declined sharply due to competition from cheaper versions. Neulasta’s sales fell down 43% at $665 million and Sensipar sales were off by 76% at $107 million. The sales of newer drugs like cholesterol fighter Repatha and migraine drug Aimovig rose. Repatha was up by 26% to $200 million, while Aimovig’s sales grew 3% to $98 million in the quarter. In the quarter, the company saw worldwide product sales to decline by 2% to $5.9 billion as the portfolio transition. Further, the company is encouraged by the strong 21% volume driven growth from the ex-U.S. markets, which helped the company to continue the global expansion including into China, which will also benefit from the company’s collaboration with BeiGene, that closed earlier this month.

Moreover, the company’s cash and investments were of total $8.9 billion at the end of 2019, which reflects a decrease of $20.4 billion from the end of 2018. This decrease was mainly due to the Otezla transaction, cash return to shareholders in the form of dividends and share repurchases as well as debt repayment. The company’s free cash flow was $8.5 billion in 2019 compared to $10.6 billion in 2018. The decline is due to lower net income, timing of working capital, and an advance tax deposit.

AMGN in the fourth quarter of FY 19 has reported the adjusted earnings per share of $3.64, missing the analysts’ estimates for the adjusted earnings per share of $3.41, according to analysts surveyed by FactSet. The company had reported 1 percent fall in the adjusted revenue to $6.2 billion in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $6.03 billion. The company has posted the Non-GAAP operating margin of 44.6% for the fourth quarter, compared to 45.3% in Q4 of 2018.

Amgen expects adjusted 2020 earnings to be in the range of $14.85 to $15.60 a share on revenue expected to be in the range of $25 billion to $25.6 billion, while Analysts had estimated 2020 adjusted earnings of $16.14 on revenue of $25.5 billion, according to Refinitiv IBES data.

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