NEW YORK (TheStreet) -- Shares of Amgen (AMGN) - Get Report were falling 9.76% to $144.91 on heavy trading volume late-afternoon Friday as Leerink analysts said the company's better-than-expected 2016 fiscal third-quarter results were less important than the outlook for its arthritis drug Enbrel.
After yesterday's closing bell, the biotechnology company posted adjusted earnings of $3.02 per share, topping analysts' estimates of $2.79 per share. Revenue came in at $5.81 billion, which surpassed Wall Street's expected $5.73 billion.
But Leerink believes the "most important disclosure" was the slowing and "apparent ending" of pricing power for Enbrel.
The firm cut its price target to $163 from $193 and maintained its "market perform" rating on Amgen stock.
Leerink estimates that Enbrel price increases generated more than 80% of the company's operating income growth for the last six quarters.
The end of that pricing power leaves Amgen open to revenue and earnings erosion from biosimilar and branded competitors, the firm said.
"We cannot identify pipeline programs of sufficient size to offset the outlook for this core business, and even with a moderately positive outlook for Repatha, see revenue growing in the low single digits through the end of the decade," the firm said in an analyst note.
Credit Suisse analysts said they hope to see Amgen do more business development to help offset the lack of growth in its legacy products.
The firm reduced its price target to $200 from $203 but kept its "outperform" rating.
Credit Suisse added that it expects little net selling price increases for Enbrel in 2017.
More than 12.79 million of the company's shares changed hands so far today vs. its average 30-day volume of 2.7 million shares per day.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
The team rates Amgen as a Buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and reasonable valuation levels. The team feels its strengths outweigh the fact that the company shows weak operating cash flow.
You can view the full analysis from the report here: AMGN