AMGN Down 10% in 3 Months: How to Play the Stock as Tariff Woes Linger

Amgen's (AMGN) stock has experienced volatility due to macroeconomic uncertainty and concerns about potential future tariffs on pharmaceuticals, though it has outperformed the industry year-to-date. First quarter revenues grew 9% driven by key drugs like Prolia, Repatha, and Blincyto, plus new rare disease drugs from the Horizon Therapeutics acquisition, while biosimilar sales rose 35% year-over-year to $735 million; however, the company faces patent expirations for Prolia and Xgeva, pricing headwinds, and slowing sales of some rare disease drugs, but its pipeline, including the obesity drug MariTide and Imdelltra, offers potential growth catalysts.

Analysis

Amgen's stock has declined 10.4% over the past three months, influenced by broader macroeconomic uncertainties, including trade tensions and potential tariffs on pharmaceuticals, despite outperforming its industry, sector, and the S&P 500 year-to-date with a 7.3% rise. The company reported a 9% year-over-year revenue increase in Q1 2025, driven by strong demand for innovative medicines like Prolia, Repatha, and Blincyto, new drugs Tavneos and Tezspire, and contributions from the Horizon Therapeutics acquisition, particularly rare disease drugs Tepezza, Krystexxa, and Uplizna. However, Amgen faces headwinds from declining revenues in oncology biosimilars and legacy products like Enbrel, alongside pricing pressures, competitive challenges, and lukewarm sales for Otezla and Lumakras. A significant mitigating factor is the robust growth in its biosimilar portfolio, which generated $735 million in Q1 2025 (a 35% YoY increase), bolstered by new launches such as Wezlana (Stelara biosimilar, $150 million in Q1) and Pavblu (Eylea biosimilar, $99 million in Q1), with Bekemv (Soliris biosimilar) launched in Q2 2025. The pipeline holds promise with MariTide, a GIPR/GLP-1 receptor for obesity offering less frequent dosing than competitors, and Imdelltra (tarlatamab), recently approved for pre-treated advanced small cell lung cancer (ES-SCLC) and showing blockbuster potential. Key upcoming catalysts include data readouts for MariTide in H2 2025 and FDA decisions for Uplizna (myasthenia gravis, Dec 14, 2025) and Tezspire (chronic rhinosinusitis, Oct 19, 2025). Nevertheless, significant challenges loom, including the U.S. patent expiration for Prolia and Xgeva in February 2025, expected to erode sales significantly in H2 2025, slowing sales of some rare disease drugs like Tepezza, and the Medicare Part D redesign impacting Enbrel and Otezla from 2026-2027. From a valuation standpoint, Amgen trades at a forward P/E of 13.12, below the industry average (14.74) and its five-year mean (13.80), while consensus earnings estimates for 2025 (risen to $20.79) and 2026 (risen to $21.23) have seen upward revisions.

Key Decisions for Investors

• Given the balance of strong revenue drivers, a promising pipeline, and significant headwinds like patent expirations and pricing pressures, current investors may consider maintaining their positions as per the 'Hold' sentiment, while closely monitoring execution on growth initiatives.
• Investors should meticulously track upcoming catalysts, particularly phase II data for the obesity drug MariTide expected in the second half of the year, FDA decisions for Uplizna and Tezspire later in 2025, and the commercial uptake of new biosimilars, as these will be critical indicators of Amgen's ability to offset upcoming revenue erosion.
• While Amgen's valuation appears reasonable relative to its peers and historical levels, and earnings estimates have trended positively, prospective investors should carefully weigh the growth potential from new products like MariTide and Imdelltra against persistent risks from macroeconomic uncertainty, evolving U.S. drug pricing policies, and the substantial impact of impending patent expirations on key drugs Prolia and Xgeva.