On Friday, Amgen Inc . (NASDAQ:AMGN) stock received a reaffirmation of a Conviction Buy rating and a $350.00 price target from Goldman Sachs, following an upbeat interim update on its Phase 2 study for the obesity drug MariTide. Amgen's shares experienced a notable surge in post-market trading, increasing by 15% and adding approximately $20 billion to its market capitalization.
The company's first-quarter earnings matched expectations on both revenue and profit. However, the excitement stemmed from management's optimistic briefing on MariTide, highlighting its distinct advantages over existing obesity treatments and those in development.
Amgen also announced intentions to expedite a comprehensive Phase 3 program for obesity and related conditions, in addition to starting a Phase 2 diabetes study later this year.
Goldman Sachs views these developments as highly promising. The firm's valuation of Amgen's base business at around $275 per share suggests that the market is now factoring in nearly $5 billion in peak sales for MariTide, which is about 5% of the projected $100 billion obesity market. This estimation does not include potential revenues from diabetes treatment, where competitors' drugs are forecasted to reach peak sales of around $60 billion.
Looking forward, Goldman Sachs anticipates a year rich with potential catalysts for Amgen. Updates are expected across the company's portfolio, including full Phase 2 data for Tezspire in COPD at the ATS24 conference on May 20, Phase 3 data for rocatinlimab in atopic dermatitis in the second half of 2024, a PDUFA date for tarlatamab in small cell lung cancer on June 12, and Phase 3 data for Uplinza in myasthenia gravis later in the year.
Additionally, the Phase 3 cardiovascular outcomes study for olpasiran is now fully enrolled, with a primary completion date set for December 2026.
Despite the recent gains, Amgen's stock is still trading slightly below its peak from February 1. Goldman Sachs sees a clear trajectory for further growth based on the potential of MariTide and the successful execution of Amgen's broader pipeline. The firm also notes Amgen's capacity for additional business development in the years to come.
InvestingPro Insights
Following the positive outlook from Goldman Sachs, Amgen Inc. (NASDAQ:AMGN) showcases several noteworthy financial metrics and investment considerations. With a market capitalization of $148.77 billion and a robust P/E ratio of 22.15, Amgen stands out in the biotechnology industry. The company's commitment to shareholder returns is evident through a consistent dividend history, having raised its dividend for 13 consecutive years and maintaining payments for 14 years. This dedication to dividends is complemented by a current yield of 3.23%, a figure that is appealing to income-focused investors.
InvestingPro Tips also highlight that Amgen trades at a high P/E ratio relative to near-term earnings growth and possesses a high Price / Book multiple of 23.96 as of the last twelve months ending Q4 2023. Despite seven analysts revising their earnings downwards for the upcoming period, the company's stock generally trades with low price volatility, which may offer a degree of stability for investors. For those seeking further insights and tips, there are additional InvestingPro Tips available at https://www.investing.com/pro/AMGN. Additionally, users can apply the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
Amgen's revenue has seen a growth of 7.09% over the last twelve months, with its gross profit margin impressively standing at 70.15%. These figures underscore the company's financial health and operational efficiency. As investors keep an eye on Amgen's upcoming earnings date on May 2, 2024, the InvestingPro Fair Value estimate stands at $283.79, offering a perspective on the stock's valuation compared to the current trading price.
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