Amgen (NASDAQ:AMGN) and AstraZeneca reported Phase 3 results this week for Tezspire in eosinophilic esophagitis, a condition that makes swallowing difficult. The trial met both of its main goals, and the benefit lasted through week 52. Tezspire is approved for severe asthma, so a new use would widen a drug that is already growing fast.
But Tezspire is only one piece of the story. Its sales rose 42% in the second quarter, yet Amgen’s adjusted earnings per share rose just 4% on revenue growth of 10%. The question is whether earnings can catch up with sales.
The company is a member of the Dow and sells medicines for heart disease, cancer, inflammatory conditions, and rare diseases. The business is healthy, but the stock already assumes a pickup in earnings that hasn’t arrived, and the rest of this story is about whether that assumption holds. It’s also one of the 10 No-Brainer Stocks to Buy Now.
Newer Drugs Are Carrying the Growth
Six key growth drivers grew 26% in the second quarter and made up nearly 70% of product sales. Repatha, its cholesterol drug, rose 37% on higher volume rather than higher prices, which is the sturdier way to grow. Imdelltra, a small cell lung cancer treatment, more than doubled from a year earlier.
Twenty-two products grew at double-digit rates, so no single drug has to carry the quarter. Growth this wide makes it harder for one weak franchise to drag the company down. Investors who want more Dow exposure can see our ranking of 12 Best Dow Stocks to Invest In Right Now.
Earnings Per Share Have Lagged Sales
Sales grew about 7.8% a year over the past five years, but earnings per share grew only about 2.9% a year. That gap is the surprise in an otherwise strong record.
The gap showed up again in the second quarter. Adjusted operating margin slipped half a point, as adjusted research spending climbed, mostly for MariTide, Amgen’s long-acting obesity drug. The company also dropped a second obesity candidate, AMG 513, so MariTide is the obesity program carrying the weight. Reuters reported that MariTide’s first Phase 3 results are not expected until next year. If you own the stock, you are funding a bet whose first verdict is still ahead.
Older Drugs Face Biosimilars and Price Cuts
Older medicines are the weight on the other side. Prolia sales fell 32% as biosimilar rivals cut both its volume and its price, and Xgeva, an oncology drug with the same active ingredient, faces the same pressure. Enbrel lost ground on price after Medicare price setting began in January. Reuters also reported that the FDA proposed withdrawing Tavneos, a drug for a rare vasculitis, and that Amgen has asked for a hearing.
These losses are real, yet the newer drugs have outrun them so far. Total revenue still grew at a double-digit pace, and Amgen raised its 2026 revenue outlook, according to Reuters. For investors looking to add healthcare exposure, our list of 10 Best Healthcare Stocks to Buy According to Hedge Funds is worth a look.
What the Price Is Betting On
At 19.07 times estimated 2026 adjusted earnings, the stock is priced a touch below the health care sector median of 19.53. It is about 30% above its own five-year average of 14.70. Holders are paid while they wait: Amgen declared a quarterly dividend of $2.52 a share, up 6% from a year earlier. Analysts expect adjusted earnings per share to grow just 5.43% in 2026, so the premium to its history rests on growth speeding up.
Adjusted earnings leave out acquisition-related costs, and Amgen’s own GAAP guidance is lower, at $15.80 to $17.08 a share. If you’re interested in cheaper growth names, we recently compiled a report on 10 Undervalued Growth Stocks to Buy Now.
Tezspire’s possible new use shows the product line still has room to grow. Whether earnings catch up is a different test, and with the stock well above its usual multiple, the market has already given Amgen credit for it. The next check comes when Amgen reports third-quarter results early next month.
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This article is originally published at Insider Monkey.
