Amgen Inc. Earnings: Increased Costs Strains Margins as Profit Drops

S&P 500 (NYSE:SPY) component Amgen Inc. (NASDAQ:AMGN) reported its results for the fourth quarter. Amgen is a biotechnology medicines company that discovers, develops, manufactures, and markets medicines for grave illnesses.

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Amgen Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Amgen Inc. fell to $934 million ($1.08 per share) vs. $1.02 billion ($1.08 per share) a year earlier. This is a decline of 8.6% from the year earlier quarter.

Revenue: Rose 3.4% to $3.97 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: AMGN reported adjusted net income of $1.21 per share. By that measure, the company fell short of mean estimate of $1.24 per share. Analysts were expecting revenue of $3.91 billion.

Quoting Management: “We exited 2011 with good momentum and the outlook for 2012 is even stronger,” said Kevin Sharer, chairman & CEO at Amgen. “Our acquisition of Micromet, announced today, further builds our innovative oncology therapeutics pipeline and capabilities.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the third quarter, net income fell 63.3% while the figure fell 2.7% in the second quarter and 3.6% in the first quarter.

Gross margin shrank 1.6 percentage points to 83.5%. The contraction appeared to be driven by increased costs, which rose 14.7% from the year earlier quarter while revenue rose 3.4%.

Revenue has risen the past four quarters. Revenue increased 3.4% to $3.94 billion in the third quarter. The figure rose 4.1% in the second quarter from the year earlier and climbed 3.2% in the first quarter from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the third quarter, it topped the mark by 12 cents, and in the second quarter, it was ahead by 5 cents.

Looking Forward: The average estimate for the first quarter of the next fiscal year remains unchanged at $1.33 a share. Over the past three months, the average estimate for the fiscal year has climbed from $5.21 per to share to $5.29.

Competitors to Watch: Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Biogen Idec Inc. (NASDAQ:BIIB), GlaxoSmithKline plc (NYSE:GSK), Affymax, Inc. (NASDAQ:AFFY), Genzyme Corporation (NASDAQ:GENZ), Novartis AG (NYSE:NVS), 3SBio Inc. (NASDAQ:SSRX), and NPS Pharmaceuticals, Inc. (NASDAQ:NPSP).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com