Citi raises Amgen stock price target to $305 on growth assets

Amgen is experiencing mixed analyst sentiment, with Citi raising its price target to $305 while maintaining a Neutral rating, balancing strong Horizon portfolio growth against concerns for Tepezza's stalled growth and MariTide tolerability. This comes as Amgen reported positive Phase III results for its gastric cancer treatment, bemarituzumab, prompting some firms like UBS and William Blair to raise price targets or reiterate Outperform ratings. However, BMO Capital lowered its target due to mixed MariTide data, reflecting a blend of promising pipeline developments and existing product challenges that suggest a mixed but generally optimistic long-term outlook for the biotech.

Analysis

Amgen (AMGN) presents a complex investment case, characterized by a mix of positive pipeline developments and headwinds for key products, resulting in divergent analyst ratings. Citi recently increased its price target to $305 but maintained a Neutral rating, citing the Horizon portfolio's 6% year-over-year growth as a key factor to offset anticipated erosion in its denosumab franchise. However, this view is tempered by concerns that growth for the product Tepezza has stalled and that tolerability issues persist with its obesity drug candidate, MariTide. This specific concern over MariTide was echoed by BMO Capital, which lowered its price target to $335 following a mixed data readout. In contrast, a significant positive catalyst is the successful Phase III trial for bemarituzumab in gastric cancer, which demonstrated a significant improvement in overall survival. This result prompted bullish actions from other firms, including a price target raise to $326 from UBS, an Overweight rating from Piper Sandler, and an Outperform reiteration from William Blair. The company's financial foundation appears solid, with 15.6% revenue growth over the last twelve months and a 3.2% dividend yield, providing a stable base as it navigates these product-specific opportunities and challenges.

Key Decisions for Investors

• Investors should weigh the significant long-term potential from the positive Phase III bemarituzumab trial against near-term headwinds from the stalled growth of Tepezza and tolerability concerns for MariTide.
• Closely monitor upcoming earnings reports and clinical data readouts for MariTide, as analyst sentiment is clearly divided on its prospects and this will be a key driver of share price performance.
• For income-focused portfolios, the 3.2% dividend yield, backed by strong recent revenue growth, may provide a compelling reason to hold the position despite the mixed outlook on specific drug programs.