By Jacob Sonenshine

Our stock pick of Amgen has performed decently, but not overwhelmingly. Since our recommendation last April, Amgen has gained 25%, lagging slightly behind the S&P 500's 29%.

We still like the pick. Our thesis was that the company's injectable GLP-1 product MariTide would eventually hit the market and garner strong demand. It's on the right path. At the JPMorgan Healthcare Conference in January, the company announced that MariTide could become a once-quarterly injection. Right now, it's seen as a once-monthly drug, which is still fairly attractive given that patients take Eli Lilly's more dominant Zepbound every week.

Trial subjects for MariTide have recently experienced almost 20% weight loss. That's not only fairly competitive with Zepbound's percentage in the low 20s, but is also far better than the roughly 12% experienced by takers of Foundayo, Lilly's oral pill. Amgen has shifted its focus away from making an oral pill of its own as it improves MariTide.

The best part is that Amgen doesn't even need to take a massive chunk of the GLP-1 market to make shareholders happy.

Estimates for total spending on these drugs have ranged. The final number could grow into hundreds of billions of dollars annually, based on the fact that more than one billion people globally have obesity, according to the World Health Organization. Healthcare analysts at JPMorgan forecast $200 billion by 2030.

This means, even if Amgen takes only a tiny slice of the market, it would boost sales substantially. If the company pulls in $5 billion in GLP-1 revenue, for argument's sake, it would boost sales by about 13% given analysts forecast of $37.8 billion in total 2026 revenue, according to FactSet. That's not an aggressive number, seeing that analysts expect $47 billion in combined revenue this year for Zepbound and Novo Nordisk's Ozempic and Wegovy.

That's even before considering moderate growth for the rest of the business, which is performing just fine. Sales in the fourth quarter beat expectations, helping earnings beat by almost 12%. Management has turned in higher profit than expected for 17 of the past 20 quarters.

Total revenue is expected to grow just under 3% this year. Several new drugs are just beginning to sell. The anticipated total sales growth model doesn't include the full extent of MariTide's potential.

As MariTide moves close to Food and Drug Administration approval, analysts will lift their estimates for its revenue. Pharma analysts often increase their revenue expectations from an initial "risk-adjusted, " lower figure for a drug as it moves closer to approval. Amgen will release data for its Phase 3 trial of the GLP-1 in early 2027.

The whole picture -- MariTide and the rest of the business -- could send the company's annual earnings up faster than sales, assuming MariTide's margins ultimately aren't much lower than the company's total 44% operating margin expected for this year. The key is that Amgen isn't expected to borrow much additional money -- it just refinanced $4 billion of lower interest debt -- or aggressively grow capital investments. So interest and depreciation costs won't rise much. That means, as sales get a boost from MariTide, net margins can rise, boosting earnings by a faster pace than revenue.

This can push the stock upward. Sure, its 15 times forward earnings multiple is near the high end of its five-year range. But if the earnings are significantly higher in the future, the multiple would look more compressed. It's not unreasonable to assume the stock can reclaim the $388 record high it touched early this year.

That represents an 11% gain from current levels. Amgen's defensive qualities as a healthcare stock would also work in its favor should investors shun other sectors in the face of economic risks.

Sometimes, taking no action is the best action. Hold on to this one.

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Jacob Sonenshine is a stock picks writer at Barron's Investor Circle and regular contributor to The Trader Column. His general focus is technology, consumer, industrial, and healthcare.

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April 09, 2026 02:58 ET (06:58 GMT)

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