Truist Securities has adjusted its stance on Amgen (NASDAQ: NASDAQ:AMGN), changing the stock's rating from Buy to Hold, while simultaneously increasing the price target to $333 from the previous $320.
The revision comes in the wake of recent developments regarding Amgen's product candidates rocatinlimab and Uplizna.
The firm's analyst cited a thorough review of their model following the latest data from these drug candidates as the reason for the updated price target.
Despite acknowledging Amgen's effective management of its commercial portfolio, the decision to downgrade reflects a cautious approach due to competitive market conditions and the early stage of certain assets.
Specifically, the analyst anticipates the Phase 2 obesity readout for one of Amgen's assets will align with earlier data. However, given the asset's Phase 2 status and a crowded competitive landscape, the analyst suggests that the market has already accounted for potential opportunities. This perspective influenced the decision to maintain a Hold rating.
In other recent news, Amgen is facing a proposed class-action lawsuit over an alleged $10.7 billion tax and penalties bill potentially owed to the Internal Revenue Service. The lawsuit follows accusations that the company failed to timely disclose this possible liability to its shareholders.
In other developments, Amgen's Phase 3 studies have presented mixed results. The company's drug Uplizna, used in treating myasthenia gravis, showed meaningful improvement, while rocatinlimab's results in atopic dermatitis were viewed as less impressive by some analysts.
Amgen's shares have retained their ratings from several analyst firms. TD Cowen and BMO Capital maintained positive outlooks, while Goldman Sachs and Piper Sandler reiterated their Buy and Overweight ratings respectively. However, Baird maintained its underperform rating, pointing to the less than expected results from the rocatinlimab trial.
The company also announced the approval of TEPEZZA, a treatment for thyroid eye disease, in Japan, and Otezla, a medication for moderate to severe plaque psoriasis in children and adolescents, by the FDA.
InvestingPro Insights
Amgen's recent performance and financial metrics provide additional context to Truist Securities' rating change. According to InvestingPro data, Amgen's stock is trading near its 52-week high, with a price at 94.67% of its peak. This aligns with Truist's decision to raise the price target to $333, suggesting the stock may have limited upside potential in the near term.
InvestingPro Tips highlight that Amgen has raised its dividend for 13 consecutive years and maintained payments for 14 years, indicating a strong commitment to shareholder returns. This could be attractive for income-focused investors, especially with a current dividend yield of 2.74%. However, the stock is trading at a high earnings multiple, with a P/E ratio of 56.16, which may justify the cautious Hold rating given by Truist.
The company's revenue growth of 16.37% over the last twelve months and 20.07% in the most recent quarter demonstrates Amgen's ability to expand its commercial portfolio, as noted by the Truist analyst. Yet, the high valuation multiples, including a Price/Book ratio of 29.78, suggest that much of this growth may already be priced in, supporting the analyst's view that the market has accounted for potential opportunities.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Amgen's market position and future prospects.
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