Erste Group cuts Amgen stock rating on slowing sales growth By Investing.com

Erste Group downgraded Amgen to Hold from Buy, citing slowing sales growth despite encouraging Phase 2 MariTide data. The stock trades at 22.95x P/E and 0.72x PEG, but the analyst sees limited medium-term upside as revenue growth slows to 3% in fiscal 2026 from 9% over the last 12 months. Recent Q1 2026 results beat expectations with EPS of $5.15 vs. $4.80 consensus and revenue of $8.62 billion vs. $8.59 billion, partially offsetting the cautious rating call.

Analysis

The key mismatch is between clinical optionality and financial relevance. MariTide may matter strategically, but for the stock it is still a multi-year call option, while the market is being asked to pay today for a pipeline asset that does not meaningfully offset near-term deceleration in the core franchise. That creates a classic “good science, weak near-term earnings delta” setup: as long as growth slows into the mid-single digits, valuation will be anchored to current cash flows rather than future obesity upside.

Second-order, the obesity market is increasingly a scale-and-distribution game, and monthly dosing alone is not enough to win share if efficacy, tolerability, and payer access do not clearly separate. Incumbents with stronger commercial muscle and first-mover physician habits can defend share even against differentiated products, so the larger risk is not that MariTide fails outright, but that it arrives into a crowded, increasingly reimbursed-constrained market with lower-than-expected net price realization. That keeps the upside path for AMGN capped even if development continues to read well.

Near term, the stock is likely to trade on guidance credibility and capital allocation rather than pipeline headlines. The manufacturing expansion and solid quarterly print reduce balance-sheet risk, but they do not fix the core issue: if growth is only low-single-digits over the next 12 months, any multiple rerating depends on either a sharper reacceleration in existing franchises or a materially faster obesity timeline. The market may be underestimating how little time-to-revenue there is in this story, which makes the current discount look more like a value trap than a mispricing.

The contrarian angle is that the downgrade may be too focused on slope of growth and not enough on durability of free cash flow. AMGN can still compound through buybacks and margin resilience, and if obesity sentiment turns again, the stock could re-rate before MariTide contributes meaningfully. But the better asymmetric expression is to avoid outright long exposure until the street finishes de-risking the 2026 guidance period and the pipeline can be translated into tangible near-term dollars.

Key Decisions for Investors

• Short AMGN on rallies into the next 2-6 weeks; risk/reward favors fading strength because the next incremental catalyst is more likely to be another valuation debate than a near-term revenue inflection.
• Pair trade: long a higher-growth obesity beneficiary vs short AMGN over the next 3-9 months; the relative-value thesis is that AMGN has pipeline optionality but weaker revenue conversion, so capital should migrate to names with clearer commercial monetization.
• If already long AMGN, reduce into strength and replace with a call spread rather than stock ownership; this keeps exposure to a positive MariTide surprise while limiting carry risk from multiple compression.
• Watch for a 2026 guidance reset or any sign of faster-than-expected uptake in core growth franchises; if management shows even 1-2 quarters of reacceleration, cover shorts because the stock can rerate quickly on perceived durability.
• Consider a downside hedge through AMGN puts into the next earnings window if implied volatility is reasonable; the setup is more about medium-term multiple risk than immediate earnings miss risk.