Amgen's Strong Q4 Performance and Upcoming Earnings Offer Resilience Amid Sector Challenges

Amgen (NASDAQ: AMGN) has emerged as a standout performer in the pharmaceutical sector, driven by robust sales growth, a diversified drug portfolio, and a resilient financial profile. As the company prepares for its August 5 earnings report, investors are focusing on whether Amgen can sustain its momentum amid biosimilar pressures and pricing headwinds. Here's why the stock deserves a closer look.

Q4 2024: A Quarter of Diversified Growth

Amgen's fourth-quarter results underscored its ability to generate growth across multiple therapeutic areas. Total revenue rose 11% year-over-year to $9.1 billion, fueled by strong performances from key drugs and the Horizon Therapeutics acquisition. Excluding Horizon's contributions, organic product sales grew 10% due to volume-driven demand.

Key Drug Highlights:
- Repatha® (evolocumab): Sales surged 45% in Q4 to $606 million, benefiting from expanded use in high-risk cardiovascular patients. While net selling prices dipped slightly, management expects margin pressures to ease in 2025.
- TEPEZZA® (teprotumumab): The thyroid eye disease (TED) treatment contributed $460 million in Q4, with full-year sales reaching $1.9 billion. Regulatory approval in the EU by mid-2025 could further boost its reach.
- IMDELLTRA® (tarlatamab): The first FDA-approved bispecific T-cell engager for small cell lung cancer generated $67 million in its debut quarter, highlighting Amgen's oncology leadership.

The Inflammation franchise, led by TEZSPIRE®, also shone, with Q4 sales jumping 67% to $296 million. Positive Phase 3 data for nasal polyps (WAYPOINT trial) positions TEZSPIRE for regulatory submissions in early 2025, expanding its addressable market.

Zacks Rank and Analyst Sentiment: A Neutral Outlook with Upside Potential

Amgen currently holds a Zacks Rank #3 (Hold), reflecting moderate near-term momentum. However, the VGM Score of A and Growth Style Score of B highlight its strong fundamentals. Analysts have revised 2025 EPS estimates upward 14 times in the last 60 days, pushing consensus to $20.82—a 4.9% increase over 2024.

The Hold rating is justified by short-term risks, including biosimilar threats to Prolia® (projected sales erosion in 2025) and pricing pressures on older drugs like Otezla®. Yet, the stock's average earnings surprise of 8.3% suggests Amgen consistently beats expectations, a trend likely to continue.

Valuation: A Discounted Multiple with Growth Catalysts

Amgen's forward P/E ratio of 13.46 (as of May 2025) is 23% below its industry median of 26.61, offering a compelling valuation discount. While its PEG ratio of 2.52 suggests a premium to growth expectations, the forward P/E remains attractive given its 5.4% revenue growth forecast for 2025.

The stock's free cash flow hit a record $10.4 billion in 2024, up 40% year-over-year, supporting share buybacks and R&D investments. With $35.2 billion in 2025 revenue guidance, Amgen is well-positioned to navigate sector headwinds.

August Earnings: A Catalyst for Re-Rating

The August 5 earnings report will be pivotal. Analysts expect Q3 2025 EPS of $5.21 (+4.8% YoY) and revenue of $8.86 billion (+5.6% YoY). Strong performances from TEPEZZA®, IMDELLTRA®, and the inflammation pipeline could surprise to the upside. A beat here could lift the Zacks Rank to #2 (Buy) and reaccelerate share price momentum.

Risks and Opportunities Ahead

• Biosimilars: Prolia® faces competition in 2025, but TEPEZZA®'s exclusivity and IMDELLTRA®'s first-in-class status provide offsets.
• Pipeline Advancements: MariTide® (Phase 3 planned for H1 2025) and olpasiran (for lipoprotein(a) reduction) could drive future growth.
• Regulatory Delays: The FDA's hold on AMG 513 (obesity) remains a wildcard, though discussions are ongoing.

Investment Conclusion

Amgen's diversified revenue streams, strong free cash flow, and discounted valuation make it a compelling hold for investors willing to look past near-term headwinds. With its upcoming earnings and pipeline readouts, the stock could re-rate upward. For conservative investors, the Hold rating is prudent, but aggressive investors might consider a gradual buy on dips ahead of August's results.

In a sector increasingly defined by pricing and competition risks, Amgen's execution and valuation edge position it as a strategic pick for long-term growth.