Amgen (AMGN) shares have seen a 13% increase this year yet have struggled to break past a tight trading range lately. This reflects a level of uncertainty tied to upcoming clinical trial data from its drug pipeline, regardless of its steady earnings and the company’s strong fundamentals as part of the Dow Jones Industrial Average. So, should investors consider buying Amgen stock now? Amgen's reputation is built on its diversified biotech product portfolio. The company has a rich history of innovation, evident since the 1980s with its development of Epogen, a pioneering treatment for anemia using recombinant DNA technology.
This tradition continued with the launch of Neulasta in 2003, an innovative monoclonal-antibody therapy against cancer. Today, Amgen's extensive range of blockbuster drugs spans several fields, including oncology, immunology, cardiology, inflammation, and rare diseases, making it a compelling investment. Recent performance trends highlight Amgen's impressive growth. In the second quarter, product net sales rose by 20% year over year. Twelve drugs reported at least double-digit sales growth. Osteoporosis medication Evenity's sales increased by 39% from the previous year, while asthma treatment Tezspire's sales jumped by 76% compared to Q2 2023.
Meanwhile, several early-lifecycle rare-disease products have also contributed to sales growth. Higher expenditures on product launches and ongoing R&D pressured profitability, leading to a 1% drop in EPS to $4.97 versus the previous-year quarter. Nonetheless, management anticipates full-year EPS to be in the $19.10 to $20.10 range, a company record with a 5% increase at the midpoint from 2023. Investors should keep an eye on the MariTide candidate, one of Amgen's most promising drugs in development now. Currently in phase 2 clinical studies as a weight-loss and obesity treatment, MariTide competes against major players like Eli Lilly and Novo Nordisk in a fast-growing medical category.
Early pre-clinical data suggests it might offer longer-lasting results compared to current market leaders like Zepbound and Wegovy. If future data confirms these results, Amgen could roll out its next blockbuster treatment. However, investors should be cautious about possible setbacks in MariTide's approval or commercialization, potentially impacting earnings expectations. Amgen combines growth potential with value, trading at 17 times the consensus 2024 EPS estimate. This is a bargain compared to Eli Lilly at a forward P/E of 60, or Novo Nordisk at 36. Successfully entering the GLP-1 market could launch Amgen into the next phase of growth and possibly enhance its valuation to match peers like AstraZeneca (forward P/E of 19) and AbbVie (18) as earnings increase over time.
Overall, Amgen appears to be a promising buy given its status as a healthcare sector leader and the potential catalysts for future stock rallies. This includes potential outcomes from the MariTide drug and a strong current product portfolio likely to keep benefitting shareholders.
