Amgen Shares Fall 5% After Lowering Full-Year Earnings Guidance
Amgen (AMGN) shares tumbled 5% on Wednesday after the drug developer announced a reduction in its full-year earnings guidance. The company now expects full-year diluted earnings per share (EPS) to be between $6.57 and $7.62, down from the previous range of $7.15 to $8.40. This news disappointed analysts who had estimated EPS of $8.05, according to Visible Alpha.
Strong Revenue Growth Driven by Horizon Therapeutics Acquisition
In the second quarter, Amgen reported a 20% year-over-year increase in revenue, reaching $8.4 billion. This surpassed expectations and was primarily driven by a 26% increase in sales volume. The significant growth in sales volume can be attributed to Amgen’s acquisition of Horizon Therapeutics in October.
However, despite the strong revenue growth, diluted EPS for the quarter came in at $1.38, representing a 46% drop from the previous year. This figure fell short of expectations as costs rose. Adjusted earnings, excluding one-time items, also fell 1% to $4.97, which was below projections. Amgen stated that these adjustments were primarily related to costs associated with the Horizon Therapeutics acquisition.
Market Reaction and Performance
Following the announcement, shares of Amgen closed 5% lower at $312.50 on Wednesday. However, despite this decline, the stock has still gained 8.5% since the beginning of the year.
Conclusion
Amgen’s decision to lower its full-year earnings guidance has resulted in a 5% drop in its stock price. The company reported strong revenue growth in the second quarter, driven by its acquisition of Horizon Therapeutics. However, increased costs led to a significant decline in earnings, disappointing analysts and investors. It remains to be seen how Amgen will navigate these challenges and whether it can meet its revised earnings expectations for the year.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Investing in stocks involves risks, and investors should conduct their own research and consult with a financial advisor before making any investment decisions.
Sources:
- Investopedia
