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Amgen Stock Rises Almost 20% in 6 Months: Buy, Sell or Hold?
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Amgen (AMGN - Free Report) stock has risen 19.6% in the past six months compared with an increase of 12.4% for the industry. The stock has also outperformed the sector and the S&P 500 index, as seen in the chart below.
AMGN Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
The stock has also been consistently trading above its 50-day and 200-day moving averages since early August.
One of the key reasons for the recent stock price outperformance has been its strong second-quarter results, as it beat estimates for earnings as well as for sales. Amgen is seeing a consistent increase in its sales. Amgen also has some key pipeline assets in obesity and inflammation, which have a large market opportunity. Let us discuss these factors in detail to understand how to play Amgen’s stock.
Key Drugs Driving AMGN’s Top Line
Amgen is seeing declining revenues from oncology biosimilars and some legacy established products like Enbrel. Pricing headwinds and competitive pressure are hurting sales of many products. Sales of some key brands like Otezla and Lumakras are below expectations. However, revenues from key older medicines like Prolia, Repatha, Blincyto and new drugs like Tavneos and Tezspire are driving the top line.
Amgen is also evaluating Prolia/Xgeva, Repatha, Otezla, Kyprolis, Nplate, Lumakras, Uplizna, Tezspire and Blincyto for additional indications.
Amgen has successfully completed phase III studies for three biosimilar products — Wezlana, a biosimilar to J&J’s Stelara, Bekemv, a biosimilar to Alexion’s Soliris and ABP 938, a biosimilar to Regeneron’s Eylea. Wezlana was approved in the United States in October 2023. Bekemv was approved in the EU in April 2023 and in the United States in May 2024. Both Wezlana and Bekemv are expected to be launched in the first quarter of 2025. A BLA for ABP 938 is also under review with the FDA. Phase III studies are ongoing to evaluate a biosimilar of PD-LI inhibitors, Bristol-Myers’ Opdivo (ABP 206) and Merck’s Keytruda (ABP 234). These have positioned Amgen to be in the first wave of launches of these biosimilars, which are critical to the success of biosimilar products.
AMGN’s Horizon Acquisition Contributing to Sales Growth
Amgen closed the acquisition of Horizon Therapeutics in October 2023. The addition of Horizon Therapeutics has given Amgen a significant rare disease business by adding several rare disease drugs like Tepezza, Krystexxa and Uplizna to Amgen’s portfolio. Horizon’s products added almost $1.1 billion to Amgen’s revenues in the second quarter. Horizon’s rare disease drugs should further boost revenue growth, which is likely to be accretive to earnings.
Amgen has invested several billion dollars in M&A deals over the last decade, which has bolstered its product portfolio and diversified its pipeline.
AMGN’s Interesting Pipeline in Obesity
Amgen has several interesting candidates in its pipeline, which represent significant commercial potential. An important pipeline candidate is MariTide (maridebart cafraglutide), a GIPR/GLP-1 receptor for obesity, an area gaining significant popularity, thanks to Eli Lilly (LLY - Free Report) and Novo Nordisk’s (NVO - Free Report) popular drugs, Mounjaro/Zepbound and Wegovy. Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030.
Results from several pivotal programs are expected in the second half of 2024, which could act as catalysts for the stock, including from MariTide. Top-line 52-week data from the phase II study on MariTide in adults with overweight or obesity is expected in late 2024. Amgen is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes. Amgen plans to begin a phase II study on the candidate in type II diabetes in late 2024.
Other than MariTide, Amgen also has some obesity candidates in preclinical development that consist of both oral and injectable incretin and non-incretin approaches. One of these programs is expected to enter clinical development later in 2024.
Another key pipeline readout will be from a phase III study on the rare disease drug Uplizna in myasthenia gravis in the second half of 2024.
AMGN’s Attractive Valuation & Declining Estimates
AMGN’s stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the company shares currently trade at 16.38 on a forward 12-month basis, lower than 20.49 for the industry.
AMGN Stock Valuation
Image Source: Zacks Investment Research
Following the company’s tightening of its earnings guidance range on the second-quarter conference call, the Zacks Consensus Estimate for 2024 earnings has declined from $19.50 to $19.49 per share. For 2025, the number has declined from $20.61 to $20.53 per share over the past 30 days.
Image Source: Zacks Investment Research
Conclusion
Amgen has its share of problems, like increased pricing headwinds and competitive pressure on some drugs like Otezla and Enbrel. Amgen also expects R&D costs to increase and operating margins to be lower in the second half of the year. However, we believe the company is well placed to maintain long-term revenue growth, driven by key drugs and new innovative medicines like Tezspire, Tavneos and Imdelltra. It is expected to see continued clinical success from its mid- to late-stage pipeline. MariTide has the potential to be a game-changer for Amgen.
Image: Bigstock
Amgen Stock Rises Almost 20% in 6 Months: Buy, Sell or Hold?
Amgen (AMGN - Free Report) stock has risen 19.6% in the past six months compared with an increase of 12.4% for the industry. The stock has also outperformed the sector and the S&P 500 index, as seen in the chart below.
AMGN Stock Outperforms Industry, Sector & S&P 500
The stock has also been consistently trading above its 50-day and 200-day moving averages since early August.
One of the key reasons for the recent stock price outperformance has been its strong second-quarter results, as it beat estimates for earnings as well as for sales. Amgen is seeing a consistent increase in its sales. Amgen also has some key pipeline assets in obesity and inflammation, which have a large market opportunity. Let us discuss these factors in detail to understand how to play Amgen’s stock.
Key Drugs Driving AMGN’s Top Line
Amgen is seeing declining revenues from oncology biosimilars and some legacy established products like Enbrel. Pricing headwinds and competitive pressure are hurting sales of many products. Sales of some key brands like Otezla and Lumakras are below expectations. However, revenues from key older medicines like Prolia, Repatha, Blincyto and new drugs like Tavneos and Tezspire are driving the top line.
Amgen is also evaluating Prolia/Xgeva, Repatha, Otezla, Kyprolis, Nplate, Lumakras, Uplizna, Tezspire and Blincyto for additional indications.
Amgen has successfully completed phase III studies for three biosimilar products — Wezlana, a biosimilar to J&J’s Stelara, Bekemv, a biosimilar to Alexion’s Soliris and ABP 938, a biosimilar to Regeneron’s Eylea. Wezlana was approved in the United States in October 2023. Bekemv was approved in the EU in April 2023 and in the United States in May 2024. Both Wezlana and Bekemv are expected to be launched in the first quarter of 2025. A BLA for ABP 938 is also under review with the FDA. Phase III studies are ongoing to evaluate a biosimilar of PD-LI inhibitors, Bristol-Myers’ Opdivo (ABP 206) and Merck’s Keytruda (ABP 234). These have positioned Amgen to be in the first wave of launches of these biosimilars, which are critical to the success of biosimilar products.
AMGN’s Horizon Acquisition Contributing to Sales Growth
Amgen closed the acquisition of Horizon Therapeutics in October 2023. The addition of Horizon Therapeutics has given Amgen a significant rare disease business by adding several rare disease drugs like Tepezza, Krystexxa and Uplizna to Amgen’s portfolio. Horizon’s products added almost $1.1 billion to Amgen’s revenues in the second quarter. Horizon’s rare disease drugs should further boost revenue growth, which is likely to be accretive to earnings.
Amgen has invested several billion dollars in M&A deals over the last decade, which has bolstered its product portfolio and diversified its pipeline.
AMGN’s Interesting Pipeline in Obesity
Amgen has several interesting candidates in its pipeline, which represent significant commercial potential. An important pipeline candidate is MariTide (maridebart cafraglutide), a GIPR/GLP-1 receptor for obesity, an area gaining significant popularity, thanks to Eli Lilly (LLY - Free Report) and Novo Nordisk’s (NVO - Free Report) popular drugs, Mounjaro/Zepbound and Wegovy. Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030.
Results from several pivotal programs are expected in the second half of 2024, which could act as catalysts for the stock, including from MariTide. Top-line 52-week data from the phase II study on MariTide in adults with overweight or obesity is expected in late 2024. Amgen is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes. Amgen plans to begin a phase II study on the candidate in type II diabetes in late 2024.
Other than MariTide, Amgen also has some obesity candidates in preclinical development that consist of both oral and injectable incretin and non-incretin approaches. One of these programs is expected to enter clinical development later in 2024.
Another key pipeline readout will be from a phase III study on the rare disease drug Uplizna in myasthenia gravis in the second half of 2024.
AMGN’s Attractive Valuation & Declining Estimates
AMGN’s stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the company shares currently trade at 16.38 on a forward 12-month basis, lower than 20.49 for the industry.
AMGN Stock Valuation
Following the company’s tightening of its earnings guidance range on the second-quarter conference call, the Zacks Consensus Estimate for 2024 earnings has declined from $19.50 to $19.49 per share. For 2025, the number has declined from $20.61 to $20.53 per share over the past 30 days.
Conclusion
Amgen has its share of problems, like increased pricing headwinds and competitive pressure on some drugs like Otezla and Enbrel. Amgen also expects R&D costs to increase and operating margins to be lower in the second half of the year. However, we believe the company is well placed to maintain long-term revenue growth, driven by key drugs and new innovative medicines like Tezspire, Tavneos and Imdelltra. It is expected to see continued clinical success from its mid- to late-stage pipeline. MariTide has the potential to be a game-changer for Amgen.
All these factors, along with the stock’s reasonable valuation, are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested for now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.