Amgen (AMGN) Implied Move Suggest Upside Post Earnings

Investors would be looking at Amgen’s plans to take on current leaders in the weight loss space when the company reports its Q4 2023 results on Tuesday. It is advancing its weight loss pipeline, with clinical trials underway for its GLP-1 receptor agonist maridebart cafraglutide (formerly AMG 133) and non-incretin-based oral therapy, AMG 786.

Something we need to be aware is whether Amgen can meet the H1 2024 timeline for a Phase 1 readout for AMG 786, noting that a related update on a federal register suggests that the readout will be pushed back to H2. Meanwhile, Phase 2 results for AMG 133 are expected later this year.

Current consensus estimates for the company stand at $4.59 EPS for the quarter, a ~12% rise from last year, and ~$8.1B in revenue with a ~19% YoY increase.

Technical is showing uptrend, but the key focus would be how AMGN's obesity pipeline will perform or rather if shown in their guidance, is there further potential?

AMGN is trading above the 50-day MA period for about 50 trading sessions, and it is showing no sign of declining down, so I would expect AMGN to continue its upside.

Unless we saw news that AMGN could not meet H1 2024 timeline for a Phase 1 readout for AMG 786, we might see AMGN to trend downside.

AMGN last reported earnings on 31 Oct 2023 after the market close (AMC). AMGN shares gained +2.0% the day following the earnings announcement to close at 258.81. Following its earnings release, 97 days ago, AMGN stock has drifted +24.4% higher.

From the time it announced earnings, AMGN traded in a range between 260.41 and 329.72. The last price (321.97) is closer to the higher end of range.

Estimated implied straddle for upcoming earnings is 4.8%. We could see a higher upside if Amgen present a plan that could gain investors confidence that they can take on a bigger market share in the weight loss market.

The options market overestimated AMGN stocks earnings move 50% of the time in the last 12 quarters. The predicted move after earnings announcement was ±3.1% on average vs an average of the actual earnings moves of 3.4% (in absolute terms). This shows you that AMGN tended to be more volatile than the options market predicted for the earnings stock price reaction.

This suggest that we could see an upside, but the increase might be small, unless Amgen could show that they could or manage to gain a bigger market share in the weight loss industry.

AMGN's last earnings implied volatility (IV30) going into earnings was 20.6. The last time AMGN released earnings, the implied volatility dropped to 19.8, resulting in an implied vol crush of 4%. 5 days after earnings, the 30 day IV was 18.7.

Average Implied Volatility Crush For AMGN Earnings: 10%

Average 30 Day Implied Volatility 1 Day Before Earnings: 24.3

Average AMGN 30 Day IV for the Day of Earnings: 22.0

Average 30 Day Implied Volatility 5 Days After Earnings: 21.1

Amgen stock price is currently trading on the upside, so if its earnings is better-than-expected, we could see more upside. But if there is any issues with the planned pipeline, or they do face some challenges in getting approval for their drugs.

These could bring down the stock price post earnings. I would take a cautious approach that Amgen would still gain upside but a small one.

Appreciate if you could share your thoughts in the comment section whether you think Amgen could present us with a small upside or strong upside post earnings?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.