Amgen Surges 12% on MariTide Hopes, Eyes Obesity Market

Key Takeaway

• Amgen Inc. shares surged 12% on optimism around its anti-obesity drug MariTide, marking the biggest one-day jump in nearly 15 years.
• Analysts are divided on MariTide's market potential, with some citing significant share possibilities despite competition from Eli Lilly & Co. and Novo Nordisk A/S.
• Despite recent gains, Amgen's valuation remains below competitors', with anticipation building for mid-stage study results of MariTide by year-end.

Surge in Amgen Shares

Amgen Inc. experienced a significant surge in its stock value, with a 12% increase on Friday, marking the most substantial one-day jump in nearly 15 years. This rally was driven by renewed optimism regarding Amgen's prospects in the competitive weight-loss drug market, following positive remarks from the company's CEO. The focus is on Amgen's experimental anti-obesity drug, MariTide, which investors believe could rival the current leading treatments in this lucrative sector. The enthusiasm for weight-loss medications has notably boosted the market valuations of companies like Eli Lilly & Co. and Novo Nordisk A/S, with Lilly becoming the largest healthcare company globally by market value and Novo the most valuable listed company in Europe.

Investor Sentiment and Market Dynamics

Investors have shown a keen interest in the weight-loss drug market, with Amgen's stock experiencing fluctuations based on the development stages of MariTide. Despite previous rallies in late 2022 and early 2024, concerns over the drug's safety and efficacy have led to varying levels of investor confidence. Analyst Matt Phipps from William Blair upgraded Amgen's stock to outperform, citing the potential for MariTide to capture significant market share even if it enters the market years behind its competitors. However, Mizuho analyst Salim Syed maintains a neutral stance, noting that such investor enthusiasm has historically been short-lived and emphasizing the need for Amgen to demonstrate MariTide's value convincingly.

Financial Outlook and Analyst Perspectives

Over the past three years, Amgen's shares have increased by approximately 27%, trailing behind the more substantial gains seen by Lilly and Novo. Amgen's valuation, at about 15 times forward earnings, remains below that of its competitors. The anticipation for detailed data from a mid-stage study of MariTide towards the year's end has Wall Street analysts divided. While some, like Syed, express caution regarding the sustainability of the stock's recent gains, others are more optimistic. More than half of the analysts surveyed by Bloomberg recommend buying Amgen's stock, with many seeing MariTide as a potential "multi-blockbuster" despite the dominance of Lilly and Novo and the presence of other competitors in the race to develop new treatments.

Street Views

• Matt Phipps, William Blair (Bullish on Amgen):

  "There’s a clear enthusiasm to get more things on market and try to have something that is differentiated so that even if you are three or four years behind getting to market, you can gain meaningful market share."

• Salim Syed, Mizuho (Neutral on Amgen):

  "These pile-ins tend to be short lived... Now is the third time we’re seeing this, and every single time, the stock tends to cool off afterward." "The onus is going to be on Amgen to prove that they have a compound that people are willing to ascribe this much value to. If that data does not pan out, the stock is likely going to go substantially lower."