What a difference a day makes. Morgan Stanley cuts Amgen next year. Amgen announced its earnings and missed the estimates, that it will split, and start share repurchase program. The slide started in after hours trading and the stock is down about 10%. Co. says slower growth in future. Apparently no new drugs in sight.
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Amgen posts higher profits, sees slower growth
By Deena Beasley
LOS ANGELES, Oct 20 (Reuters) - Amgen Inc. <AMGN.O> reported on Wednesday higher third-quarter profits, but the strong results were offset by the biotechnology company's forecast for higher costs and slower growth next year.
Amgen also said it planned to split its stock and buy back up to $2 billion of its shares, but the Thousand Oaks, Calif.-based company's stock, which gained 2 3/16 to 86 1/8 in regular Nasdaq trading, still fell to 80 1/4 in afterhours trading. The news was announced after the close of trading.
Amgen said its earnings rose to $300 million, or 56 cents a diluted share, in the quarter ended Sept. 30, from $221 million, or 42 cents, in the year-earlier period. The results included a one-time gain of 6 cents a share related to reduced liabilities, bringing operating profit to 50 cents a share.
Wall Street analysts had expected the company to earn 49 cents a share excluding special items, according to First Call/Thomson Financial, which tracks Wall Street profit forecasts.
Amgen, citing stockpiling by drug wholesalers ahead of Y2K, said it expected overall product sales to increase in the low double-digit range next year, compared with a growth rate of 20 percent for this year.
In addition, the company told analysts that sales and marketing costs would total $800-850 million next year, compared with earlier estimates of $700 million, according to Niva Almaula, an analyst at Mehta Partners.
"They are raising head count to get ready for the launch of new drugs," she explained.
Amgen also said overall product sales increased 20 percent in the third quarter, to $769 million from $642 million. Sales of lead drugs Epogen, used by kidney dialysis patients, and Neupogen, used by cancer and AIDS patients, rose 28 percent to $449 million and 9 percent to $313 million, respectively.
In addition, the company announced plans for a two-for-one split of its common stock on Nov. 19 to shareholders of record on Nov. 5. Amgen also said its board authorized the repurchase of up to $2 billion of the company's common stock between now and December 2000, replacing the remaining $127 million of the stock repurchase plan announced in October 1998.
For 1999, Amgen said it still expected a growth rate for Epogen sales in the mid-20s and Neupogen sales growth in the high single to low double-digit range.
After adjusting for the stock split, Amgen said it expected 1999 earnings per share to be in the range of 95 to 97 cents.
For 2000, Amgen said it expected Epogen's sales rate growth to slow to the mid-teens, while Neupogen sales would grow in the high single digits.
"The year 2000 represents a year of significant sales and marketing investment for Amgen as we prepare for the potential launches of IL-1ra, NESP and abarelix," Amgen Chairman Gordon Binder said in a statement. "Slower growth in R&D and various cost efficiencies will offset part of this investment."
Arbrelix is used to treat conditions including prostate cancer and endometriosis. IL-1ra is a treatment for arthritis, and NESP is a second-generation treatment for kidney dialysis patients.
"As a result ... we expect Amgen's earnings per share growth rate to be in low double digits," Binder added.
22:40 10-20-99
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RESEARCH ALERT - Amgen <AMGN.O> 1999 view cut
NEW YORK, Oct 21 (Reuters) - Morgan Stanley Dean Witter said on Thursday it cut its 1999 earnings view for Amgen Inc. <AMGN.O> to $1.92 from $1.97.
Said Q3 earnings per share of $O.50 matched analyst Doug Lind's estimate, but company unexpectedly announced it would speed up SG&A spending ahead of expected 2001 launches of as many as three products.
Lind said he will raise estimates on SG&A considerably, seeing Amgen entering period of increased costs and slowed growth in product revenue and EPS.
Amgen shares were down 7-1/4 at 78-7/8 in midmorning trade on the Nasdaq.
10:44 10-21-99 |
