On Wednesday, Goldman Sachs reiterated its Conviction Buy rating on Amgen (NASDAQ:AMGN), maintaining a price target of $369.00. The endorsement follows Amgen's progress through a year filled with significant events, particularly focusing on the anticipated Phase 2 obesity data for MariTide, expected by the end of 2024. Positive outcomes could open up a substantial market opportunity in obesity treatments, with a projected total addressable market of $130 billion by 2030.
The analyst noted that the upcoming data is critical for validating Amgen's approach of combining a GLP1-R agonist with a GIPR antagonist, which could set MariTide apart from existing obesity treatments like Novo Nordisk (NYSE:NVO)'s Wegovy and Eli Lilly (NYSE:LLY)'s Zepbound, as well as those under development. The expectation is that MariTide, administered monthly, will show at least equivalent efficacy to Zepbound, which is given weekly, potentially achieving around 20% weight loss in non-diabetic patients after 52 weeks, with a tolerable side-effect profile.
The report also delves into the competitive landscape for obesity drugs and sets expectations for the impact of the MariTide data on Amgen's stock. A bear case scenario suggests a potential 12% downside to around $285, reflecting just the base business value, while a bull case points to over 23% upside, with the stock potentially surpassing $400 on the back of strong data.
Furthermore, the analyst anticipates a re-rating of Amgen's shares upon successful results, noting that the stock is currently trading at approximately 15.5 times its forecasted 2025 earnings per share, aligning with its five-year average.
The potential for a higher earnings multiple, possibly exceeding 20 times with robust data, is highlighted, alongside the expectation that both obesity and non-obesity revenue prospects will begin to be factored into the stock price. This re-rating is also expected to alleviate concerns regarding exclusivity losses projected for the latter half of the decade.
In other recent news, Amgen is under the spotlight with significant developments. The company's Phase 3 MINT trial data for Uplizna, a treatment for myasthenia gravis, has shown promising results, as reported by TD Cowen, who maintained a Buy rating and a price target of $381.00 for Amgen. However, Truist Securities has downgraded Amgen's rating from Buy to Hold, despite increasing the price target to $333, due to the competitive market conditions and early stage of certain assets.
Amgen is also facing a proposed class-action lawsuit over an alleged $10.7 billion tax and penalties bill potentially owed to the Internal Revenue Service. Goldman Sachs has reaffirmed its Buy rating on Immunovant (NASDAQ:IMVT) shares, following recent data from Amgen's Phase 3 study on Uplizna.
In the meantime, Amgen has received approval for 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 financial metrics and market position offer additional context to Goldman Sachs' bullish outlook. According to InvestingPro data, Amgen boasts a substantial market capitalization of $174.68 billion, underscoring its significant presence in the biotechnology sector. The company's revenue growth of 16.37% over the last twelve months and a quarterly revenue growth of 20.07% in Q2 2024 align with the positive sentiment expressed in the article regarding Amgen's potential in the obesity treatment market.
InvestingPro Tips highlight Amgen's strong dividend history, having raised its dividend for 13 consecutive years and maintained payments for 14 years. This demonstrates the company's financial stability and commitment to shareholder returns, which could be further bolstered by successful developments in its obesity treatment pipeline.
However, it's worth noting that Amgen is trading at a high P/E ratio of 55.64, which may already factor in some of the growth expectations discussed in the article. The stock is also trading near its 52-week high, with a price that is 93.73% of its 52-week peak, suggesting that investors are optimistic about the company's prospects, including the potential success of MariTide.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Amgen, providing a deeper understanding of the company's financial health and market position.
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