Amgen Expected to Raise Guidance Even Higher

Amgen(AMGN) is expected to use added cost savings squeezed from its Immunex acquisition -- along with surging sales of key drugs -- as fodder to raise earnings guidance for next year.

The world's largest biotech firm, which will host an investor conference call on Thursday morning, is already on tap to grow 2003 earnings by 20%.

Just how much more it can pad profits next year is an open question. And how Amgen goes about doing it is also ripe for debate, biotech watchers say. Amgen management might offer a range of bottom-line guidance, or they could just talk up top-line revenue growth that would lead analysts, naturally, to raise their own profit forecasts.

Not much in the way of palace intrigue in the hours leading up to the call, but then, there isn't much to complain about when it comes to Amgen's ability to hit its marks these days.

"Amgen has beaten Wall Street's estimates by a combined 6 cents per share over the last two quarters, and they've done that in the face of weaker-than-expected Enbrel sales," says SG Cowen's Eric Schmidt, referring to the rheumatoid arthritis drug picked up in the Immunex deal.

"Starting in 2003, we think you'll see Enbrel start contributing to earnings rather than detract from them, and that gives Amgen three drugs in the market that are ramping up growth significantly. It's the kind of situation you wait for if you're a biotech investor." Schmidt rates Amgen a strong buy, and his firm doesn't do banking for the company.

In advance of any new guidance, Amgen is expected to earn $1.65 in 2003, according to the consensus estimate compiled by Thomson Financial/First Call.

Banc of America Securities' Mike King says he'd be happy if Amgen management raises 2003 earnings guidance to around $1.70 per share. By his reckoning, that's easily attainable, because relatively small, incremental upside growth in the Epogen/Aranesp and Neupogen/Neulasta drug franchises could contribute another 6 cents per share and 4 cents per share, respectively, to Amgen's earnings. King rates Amgen buy, and his firm doesn't do banking for the company.