Amgen stock (NASDAQ: AMGN) has experienced a strong 9% increase in just one week, outperforming the broader S&P 500 index, which saw a 1.5% increase. This rise in stock value can largely be attributed to the progress made with Amgen’s weight-loss drug, MariTide, as well as the positive Q1 results that were reported recently. The company reported revenues of $7.45 billion and adjusted earnings of $3.96, both of which exceeded consensus estimates. In this article, we will delve into Amgen’s stock performance, key takeaways from its recent results, and its current valuation.
Looking at Amgen’s stock performance, it has shown a 30% gain from early January 2021 to now, reaching around $300, compared to a 40% increase for the S&P 500 during the same period. However, the rise in Amgen’s stock has not been consistent, with returns of -2% in 2021, 17% in 2022, and 10% in 2023. In comparison, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023, indicating that Amgen underperformed the index in 2021 and 2023.
In the current uncertain macroeconomic environment with high oil prices and elevated interest rates, there is speculation on whether Amgen could face a situation similar to 2021 and 2023, where it underperformed the S&P 500, or if it will experience a strong jump. From a valuation perspective, Amgen’s stock appears fully priced, with analysts estimating an average price of $292, close to its current market price.
Amgen reported a revenue of $7.4 billion in Q1, reflecting a 22% year-over-year growth, driven by various drugs and the acquisition of Horizon Therapeutics. However, Amgen faced challenges with its biosimilar, Amjevita, for AbbVie’s Humira, which saw slower growth in Q1. The company’s adjusted operating margin dropped in the first quarter due to higher amortization expenses related to the Horizon Therapeutics acquisition, resulting in lower adjusted profits compared to the previous year.
Looking ahead, Amgen anticipates its 2024 sales to be between $32.5 billion and $33.8 billion, with adjusted earnings per share expected to fall between $19.00 and $20.20. The company attributes its revenue growth to the expansion of certain drugs while noting declines in sales for older medications. The potential game-changer for Amgen could be MariTide, as the company progresses with a late-stage clinical trial for its weight-loss injection, which could stand out in the competitive weight-loss treatment market.
Despite its recent rise, Amgen stock is currently trading at 15x forward expected earnings, slightly higher than the average of the last five years. It is believed that the potential of Amgen’s obesity injection is not fully factored into its current valuation, suggesting that the stock could see significant growth in the future. Overall, investors may consider entering Amgen at its current levels for long-term gains, while also monitoring how the company’s peers fare in comparison to across various industries.
