AMGN - Should you buy Amgen's stock above $300?
2024-05-31 13:22:01 ET
Amgen Inc. (NASDAQ:AMGN) has recently been in the news due to its involvement in the promising obesity drug market. Analysts project significant growth in this sector, with Amgen among key players like Novo Nordisk and Eli Lilly.
The U.S. FDA has approved Amgen’s Bkemv, the first interchangeable biosimilar for Soliris. This approval is a milestone, as Soliris had substantial sales of $739 million in Q1 2024, showcasing Amgen’s ability to compete in the biosimilars market.
Recent financial performance and growth in key products
Amgen’s Q1 2024 earnings report showed a 22% year-on-year revenue increase to $7.45 billion. However, higher operating expenses resulted in flat non-GAAP net income, indicating the challenges of managing growth while controlling costs.
Amgen’s top-selling products showed impressive growth. Repatha, a cholesterol-lowering drug, saw a 33% increase in sales, while Evenity, an osteoporosis treatment, grew by 35%. The bone tumor therapy Xgeva and leukemia drug Blincyto also reported robust growth.
Obesity drug market potential and analysts’ views
Amgen is also making significant strides in the obesity drug market with its candidate MariTide. This drug is expected to play a crucial role in the rapidly expanding obesity treatment sector, which is projected to reach $130 billion by 2030.
Analysts remain optimistic about Amgen’s future, with a forward price to earnings ratio of around 16x, placing it competitively among big pharma companies. This valuation reflects confidence in Amgen’s ability to sustain its growth trajectory.
Despite facing potential patent expiries, Amgen’s robust pipeline and strategic acquisitions, like that of Horizon Therapeutics, position it well for continued success. The company’s commitment to innovation and expansion in critical therapeutic areas is evident.
Now, let’s see what the charts have to say about Amgen’s stock performance. We’ll analyze the technical indicators to determine whether buying Amgen’s stock above $300 is a prudent investment decision.
Recovery and resistance: Challenges above $320
Amgen’s stock has experienced a consistent uptrend since the start of 2014, delivering fivefold returns to investors. However, between February and April this year, the stock saw a rapid decline from above $320 to $260. Despite a recovery following the company’s Q1 earnings report on May 2nd, it has yet to reach a new all-time high.
AMGN chart by TradingView
Currently, the stock is in an intriguing position with both medium-term and long-term indicators in the green, but it faces resistance above $320. Investors bullish on the stock should wait for it to break above this resistance level before initiating a long position.
For traders looking to short the stock, a strategy could be to short if the stock closes below $300 for two consecutive days. In this case, they could set a stop loss at $323, the recent swing high, and target $260, the near-term support, for booking profits.
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