Amgen’s Underperform Rating: Concerns Over R&D Expenses and Trial Strategy Impacting Future Growth

Bank of America Securities analyst Tim Anderson reiterated a Sell rating on Amgen yesterday and set a price target of $272.00.

Tim Anderson’s rating is based on a combination of factors, including Amgen’s recent financial performance and future outlook. Despite Amgen’s solid second-quarter results, which surpassed consensus expectations in both revenue and earnings per share, the company’s shares experienced a decline. This drop is attributed to the ongoing challenges within the biopharmaceutical sector and concerns over increasing research and development expenses, particularly related to obesity, which may impact margins and earnings beyond 2026.
Furthermore, Amgen’s decision to conduct its cardiovascular outcome trial using a placebo, as opposed to an active comparator like its competitor Lilly, raises questions about the trial’s effectiveness. Additionally, the company’s long-term growth profile is considered average or below average, and there are uncertainties regarding the accuracy of consensus models for R&D spending. These factors contribute to the underperform rating and the price objective of $272, which is below the current trading price.

Anderson covers the Healthcare sector, focusing on stocks such as Eli Lilly & Co, Gilead Sciences, and Amgen. According to TipRanks, Anderson has an average return of 8.9% and a 65.38% success rate on recommended stocks.