Amgen (AMGN) Continues to Reward Shareholders, Ups Dividend

Amgen, Inc. AMGN has announced a 10% hike in its quarterly dividend. Quarterly dividend was increased from $1.32 per share to $1.45 per share. The first increased dividend will be paid on Mar 8, 2019 to shareholders of record as of Feb 15. The new quarterly dividend amounts to an annual dividend of $5.80 per share, which implies a dividend yield of 3%.

Amgen regularly returns cash to shareholders through dividends. The company’s target is to return more than 60% of adjusted net income in the form of dividends and share buybacks through 2018. The company started paying dividends in 2011 and has raised it 25% a year on average. Amgen raised its quarterly dividend for 2016 by 27% and for 2017 and 2018 by 15% each. Its free cash flow grew 9% from 2016 to $10.5 billion in 2017, driven by higher profitability. The company also bought back shares worth $3.1 billion in 2017 and $15.7 billion in the first nine months of 2018.

So far this year, Amgen’s stock has risen 10.1% against 19% decrease of its industry.

 

 

Amgen has done relatively well in 2018 so far, coming up with strong quarterly results and positive pipeline and regulatory updates.

Amgen’s newer drugs – Prolia, Xgeva, Blincyto, Repatha, Kyprolis – are performing well. This year, Amgen made rapid progress with its pipeline and line extensions.

The approval of migraine candidate, Aimovig this year was a huge boost. Amgen has developed Aimovig in partnership with Novartis NVS. Aimovig was the first FDA-approved treatment, specifically developed to treat migraine by blocking calcitonin gene-related peptide (CGRP).

Amgen has also delivered on its biosimilars pipeline so far this year, which represents significant growth opportunity. Two of its biosimilars, Kanjinti (a biosimilar of Roche’s RHHBY cancer drug Herceptin) and Amjevita (biosimilar of Abbvie’s ABBV blockbuster RA drug, Humira) were launched in EU this year and can contribute to sales in the future quarters. Amgen’s restructuring plan is making it leaner and more cost efficient. Lower taxes and share buybacks should provide some bottom-line support.

However, Amgen faces challenges related to its more mature products such as launch of competing biosimilar versions of Neulasta and Epogen, further sales erosion of Neupogen and Aranesp and increasing competitive pressure on Enbrel. Meanwhile, uptake of key new drug, Repatha has been slow due to payer restrictions. The recent price cut is expected to hurt Repatha volumes going forward.

Amgen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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