Biotechnology sector-specific exchange traded funds were flat after Amgen (NasdaqGS: AMGN) provided a mixed earnings report but announced that it will return value to investors through greater share buybacks.
Meanwhile, Amgen shares surged 9.0% on Tuesday. AMGN makes up 13.2% of BBH’s underlying portfolio, 10.7% of IBB, and 10.6% of IBBQ.
For its fourth quarter earnings, Amgen reported $4.36 per share excluding items, beating analysts’ expectations of $4.08, according to Refinitiv. However, the company missed on revenue, reporting $6.85 billion for the quarter, compared to the expected $6.87 billion.
Amgen also announced that it will buy back between $6 billion and $7 billion worth of stock this year, including up to $6 billion during the first quarter, MarketWatch reports.
The biotechnology company, which has about 563 million shares outstanding and a market capitalization of about $125 billion, also spent about $5 billion in 2021 to repurchase 21.7 million shares.
Furthermore, Amgen spent $4 billion in dividends over 2021, and the company is expected to increase dividend payouts this year with a recent 10% increase in the quarterly payout of $1.94.
“We realized strong volume growth for many of our key products during last year,” Robert Bradway, chairman and CEO of Amgen, said. “These products, combined with our many pipeline opportunities, position us well for long-term growth.”
Amgen has enjoyed a rebound in business, with patient visits and diagnosis rates returning to pre-pandemic levels by early in the fourth quarter. The company is also seeing some shifts back to virtual engagements, delayed healthcare procedures, and variability in demand patterns with the emergence of the COVID-19 Omicron variant.
The recent selling in the biotech segment could also open new deal-making in the space.
“It’s not lost on us that the recent decline in valuations for many biotech assets could create more compelling opportunities for us,” long-time chief executive Robert Bradway said at the company’s business review meeting with investors, Reuters reports.
“We have the financial strength, the flexibility to consider a wide range of possibilities.”
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