Amgen Stock Falls 12% in a Month: Should You Buy the Dip?

Amgen’s AMGN stock has declined 12.1% in the past month. Late last month, Amgen announced the much-awaited 52-week top-line data from a phase II study on MariTide, its GLP-1 therapy being developed for obesity and related conditions. The data showed that MariTide led to sustainable weight loss, robust and clinically meaningful improvements in cardiometabolic parameters and a strong reduction of average blood sugar levels.However, despite the encouraging data, Amgen’s stock has declined as the weight loss reduction was at the lower end of investor expectations of 20-25%. The 20% reduction was similar to that achieved by currently approved GLP-1 drugs for obesity, Eli Lilly’s LLY Zepbound and Novo Nordisk’s NVO Wegovy in clinical studies.Also, in early November, some analysts at a global financial services firm claimed that a review of the phase I data on MariTide showed that the candidate led to a drop in bone mineral density (“BMD”). Reduced BMD can increase the risk of fractures. The concerns resulted in a sharp decline in the stock price though the company later dismissed the concerns. Later, along with the 52-week data, Amgen mentioned that MariTide also did not result in any significant changes in BMD.The sharp decline in AMGN’s stock price led some investors to wonder whether to buy, sell or hold the stock. Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock amid the recent price decline.Key Drugs Driving AMGN’s Top LineAmgen is seeing declining revenues from oncology biosimilars and some legacy established products like Enbrel. Pricing headwinds and competitive pressure are hurting sales of many products. Sales of some key brands like Otezla and Lumakras have been lukewarm. However, revenues from key older medicines like Prolia, Repatha, Blincyto and new drugs like Tavneos and Tezspire are driving the top line. Rare disease drugs like Tepezza, Krystexxa and Uplizna, added from last year’s acquisition of Horizon Therapeutics, are also boosting top-line growth.Amgen is also evaluating Prolia/Xgeva, Repatha, Otezla, Kyprolis, Nplate, Lumakras, Uplizna, Tezspire and Blincyto for additional indications. Approval for these drugs can potentially drive further top-line growth.AMGN’s Interesting PipelineAmgen has invested several billion dollars in M&A deals over the last decade, which has bolstered its product portfolio and diversified its pipeline.Amgen is developing MariTide as a single dose in a convenient autoinjector device with a monthly and maybe less frequent dosing, a key feature that differentiates it from Lilly’s Zepbound and Novo Nordisk’s Wegovy, which are weekly injections.Based on the encouraging data from the phase II study, Amgen expects to launch the phase III MARITIME study on MariTide across obesity, obesity-related conditions and type-II diabetes. Amgen began a phase II study on the candidate in type II diabetes in the third quarter.Amgen also has some preclinical obesity candidates in its pipeline, including oral and injectable approaches comprising both incretin and non-incretin mechanisms. Amgen began a phase I study on one of these candidates, AMG 513, for obesity in the third quarter.Some other pipeline candidates that represent significant commercial potential are Imdelltra and rocatinlimab. Imdelltra (tarlatamab) was approved for pre-treated advanced small cell lung cancer (SCLC) in May 2024. Early launch trends of the drug are encouraging. Several studies are currently ongoing on Imdelltra in earlier line settings across extensive-stage and limited-stage SCLC. Rocatinlimab is being evaluated in phase III studies for atopic dermatitis and prurigo nodularis.Several data readouts are expected over the next 6 to 12 months, which could be important catalysts for the stock.Amgen expects to launch two new three biosimilar products, Wezlana, a biosimilar to J&J’s JNJ Stelara, Bekemv, a biosimilar to Alexion’s Soliris in the first half of 2025. Pavblu (ABP 938), a biosimilar to Regeneron’s Eylea, was approved in the United States in August 2024. Phase III studies are ongoing to evaluate a biosimilar of PD-LI inhibitors, Bristol-Myers’ Opdivo (ABP 206) and Merck’s Keytruda (ABP 234).AMGN’s Stock Performance, Valuation & EstimatesAmgen’s stock has declined 3.4% so far this year against an increase of 8.8% for the industry.AMGN Stock PerformanceImage Source: Zacks Investment Research AMGN’s stock is trading at an attractive valuation relative to the industry. Going by the price/earnings ratio, the company shares currently trade at 13.73 on a forward 12-month basis, lower than 16.97 for the industry.AMGN Stock ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for 2024 earnings has risen from $19.49 to $19.51 per share over the past 30 days. For 2025, the number has remained stable at $20.34 per share over the past 30 days.AMGN’s Estimate MovementImage Source: Zacks Investment ResearchStay Invested in AMGN Stock Despite the DipAmgen has its share of problems, like increased pricing headwinds and competitive pressure on some drugs like Otezla and Enbrel and the impending launch of a biosimilar to Prolia and Xgeva next year. Amgen also expects R&D costs to be higher in the fourth quarter than the third. Sales of Tepezza missed expectations in the third quarter, with fourth-quarter sales expected to be flat to down slightly on a sequential basis.However, we believe the company is well placed to maintain long-term revenue growth, driven by continued strong volume growth of key drugs, Repatha, Evenity and Prolia and increasing contribution from new innovative medicines like Tezspire, Tavneos and Imdelltra. It is expected to see continued clinical success from its mid- to late-stage pipeline. Though the recent data were below expectations, MariTide has the potential to be a game-changer for Amgen.All these factors, along with the stock’s reasonable valuation, are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested for now. 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Click to get this free report Johnson & Johnson (JNJ): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report Amgen Inc. (AMGN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks