We came across a bullish thesis on Amgen Inc. (AMGN) on Disruptive analytics’ Substack by Magnus Ofstad. In this article we will summarize the bulls’ thesis on AMGN. AMGN Technologies, Inc. share was trading at $335.26 as of Sept 16th.
A pharmacy shelves stocked with pharmaceutical drugs awaiting distribution.
Amgen, a rare biotech company in the Dow index, is well-known for its flagship drug EPO, but its growth today stems from a diversified portfolio across general medicine, inflammation, oncology, and rare diseases. Its portfolio includes 12 drugs growing by double digits, notably Prolia for osteoporosis, with many growth drivers coming from its acquisition of Horizon Therapeutics. This acquisition has expanded Amgen’s reach into oncology and rare diseases, making its product lineup even more robust.
The company’s oncology division has promising developments, including BLINCYTO, which is expected to show efficacy in pancreatic and colorectal cancers. IMDELLTRA, already approved for late-stage lung cancer, is anticipated to gain approval for earlier stages. In rare diseases, UPLIZNA and Dazodalibep are advancing through trials for treating rare blood disorders and Sjøgren’s disease, respectively. Amgen’s pipeline also includes promising general medicine trials, most notably MariTide, an obesity treatment poised to tap into the $100 billion obesity market. Early success in phase II trials has already led to phase III recruitment, and MariTide could add $5-10 billion to Amgen’s top line if successful, making it a potential game changer.
Financially, Amgen is expected to grow its revenue by nearly 20% this year, largely due to the Horizon acquisition. However, some analysts predict a slowdown from 2025, which seems overly pessimistic given Amgen’s strong drug pipeline. The company is likely to continue growing at 4% annually in 2025 and 2026, with MariTide offering additional upside if the trials go well. In 2024, Amgen has guided for around $33 billion in sales, and MariTide alone could contribute $5-10 billion if it becomes a competitive product.
Amgen’s valuation appears attractive, especially with the stock trading below $350. The Horizon acquisition has added $62 billion in debt to Amgen’s balance sheet, but the company plans to reduce this by $10 billion over the next 18 months, which should ease interest burdens. While deleveraging means buybacks will be limited in the near term, Amgen still offers a solid dividend, which could increase by up to 10% annually, making it an appealing choice for income-focused investors.
Given its diverse portfolio, strong pipeline, and the potential of MariTide to drive significant growth, Amgen offers a compelling risk/reward profile at current valuations, with potential for significant upside as its drug portfolio continues to develop and its debt load decreases.
Amgen Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 69 hedge fund portfolios held AMGN at the end of the second quarter which was 63 in the previous quarter. While we acknowledge the risk and potential of AMGN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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