Is Amgen Stock a Buy?

Globe and Mail

29-05-2025

Amgen (NASDAQ: AMGN) is doing something unusual in 2025. The biotech giant's shares are up 7.2% for the year as I write this while most large-cap healthcare stocks struggle; yet it trades at just 13 times forward earnings estimates compared to 21 for the S&P 500. That disconnect between performance and valuation creates an opportunity.
With 14 drugs posting double-digit sales growth in the most recent quarter, a promising obesity drug in late-stage trials, and a 3.5% dividend yield, Amgen offers investors a rare combination of growth, income, and value. Here's why this $150 billion pharmaceutical powerhouse deserves a closer look by investors of all stripes.
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Broad-based growth defies biotech blues
Amgen delivered stellar first-quarter 2025 results in early May that demonstrated the power of its diversified portfolio, with total revenue climbing 9% year-over-year to $8.1 billion and non-GAAP earnings per share surging 24% to $4.90. The company's performance was driven by remarkable strength across multiple therapeutic areas, with 14 products achieving double-digit sales growth during the three months, relative to the same period a year ago. Leading the charge was asthma blockbuster Tezspire at 65%, followed by cancer drug Blincyto with explosive 52% growth, the osteoporosis treatment Evenity at 29%, and cholesterol-lowering Repatha at 27%.
What makes Amgen's growth particularly noteworthy is its ability to maintain robust profitability while investing heavily in future innovation. The company's non-GAAP operating margin expanded 2.5 percentage points to 45.7% in the first quarter of 2025, demonstrating exceptional operating leverage even as research and development expenses climbed 12% to support late-stage clinical programs. This includes pivotal investments in MariTide, Amgen's highly anticipated obesity drug that could transform the company's growth trajectory.
Pipeline promises next wave of blockbusters
While Amgen's current portfolio delivers steady growth, the company's late-stage pipeline could unleash a new era of expansion. The crown jewel is MariTide (maridebart cafraglutide), a differentiated obesity treatment that activates the GLP-1 receptor while antagonizing GIPR. With Phase 3 trials now enrolling patients and additional studies launching throughout 2025, MariTide represents a multibillion-dollar opportunity in the white-hot obesity market.
Beyond MariTide, Amgen's pipeline depth is impressive. Rocatinlimab for atopic dermatitis has delivered stellar Phase 3 results across multiple studies, with the Ignite trial showing 42.3% of patients achieving significant skin clearance versus just 12.5% for placebo. In oncology, tarlatamab (Imdelltra) just demonstrated improved overall survival in small cell lung cancer, potentially establishing a new standard of care in second-line small cell lung cancer.
The company's biosimilar strategy also provides a competitive edge. With successful launches of Pavblu (Eylea biosimilar) and Wezlana (Stelara biosimilar), plus upcoming biosimilars for blockbusters Opdivo and Keytruda, Amgen is well positioned to capture market share as several high-earning biologics lose patent protection in the coming years.
Financial fortress with shareholder rewards
Amgen's financial profile stands out in the biotech space. The company generated $1 billion in free cash flow during Q1 2025, up from $0.5 billion a year earlier, providing ample resources for both business development and shareholder rewards. Management raised the quarterly dividend 6% to $2.38 per share, resulting in an attractive 3.5% yield at the current stock price.
The balance sheet remains rock-solid even after the $27.8 billion Horizon Therapeutics acquisition. Amgen reduced debt by $2.8 billion in Q1 and maintains the flexibility to pursue strategic opportunities while returning cash to shareholders. Full-year 2025 guidance calls for revenue of $34.3 billion to $35.7 billion and non-GAAP earnings per share of $20.00 to $21.20, representing mid-single-digit growth at the midpoint.
Is Amgen stock a buy?
With shares trading at a significant discount to the broader market, Amgen stock presents a compelling opportunity for value-conscious investors. The combination of 14 products delivering double-digit growth, a potentially transformative obesity drug in late-stage development, and a generous 3.5% dividend yield makes this biotech giant a buy for investors seeking both growth and income at a reasonable price.
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