Amgen (AMGN): a hidden player in the GLP-1 sector with great potential

The GLP-1 weight loss drugs market is one of the fastest growing segments of the healthcare industry and could reach a value of $200 billion by 2031. So far, Eli Lilly (LLY) and Novo Nordisk (NVO) dominate the market, but their shares are trading at extremely high earnings multiples. Amgen $AMGN may become a major competitor, however, with MariTide, a revolutionary drug with a monthly dosing frequency.

Why Amgen is an attractive investment:

1. MariTide: An innovative approach to treating obesity

- One injection per month vs. weekly injections for competitors

- Phase 2 clinical trial showed up to 20% weight loss

- Possibility of lower side effects than current GLP-1 drugs

2. Undervalued stock compared to competitors

-P/E ratio: $AMGN 41× trailing earnings, 15× expected future earnings

- Eli Lilly: 75× trailing earnings - significantly more expensive valuation

-Over the past 12 months, $AMGNstock is up just 8%, suggesting untapped potential

3. Strong financial background

- Free cash flow of $10.4 billion

- Dividend payout of $4.8 billion (secured without compromising R&D investment)

-Diversified portfolio - $AMGN is not dependent on just one drug

4. Opportunity for rapid growth if MariTide wins approval

-If regulatory authorities approve MariTide, $AMGNcould gain significant market share in the GLP-1 market

- Current low stock valuation could lead to rapid price growth

Risks and Challenges:

1. Regulatory approval of MariTide is not certain

- Phase 2 clinical trials did not meet some expectations (anticipated attrition of up to 25%)

- Potential competitive response from Eli Lilly and Novo Nordisk

2. Stock volatility

- Shares fell sharply after November clinical trial results, but market may have overreacted

- Investors still reluctant to fully appreciate MariTide's potential

3. Rising competition in the GLP-1 market

- Eli Lilly and Novo Nordisk increase production and innovate their drugs

- New pharmaceutical companies may enter the market with improved versions of GLP-1 drugs

Is it worth investing in Amgen:

Why YES?

Undervalued stock - P/E of 15 times future earnings vs. 75 times for Eli Lilly

Strong portfolio and financial stability - $AMGN doesn't just live off MariTide

Great growth potential in GLP-1 segment - Monthly dosing as a competitive advantage

Potential for strong growth in the event of regulatory approval

What to watch out for?

- Risk of failure of MariTide in final trials

- Strong competition in the GLP-1 segment

-Short-term volatility of $AMGNstock

➡ Conclusion: Amgen $AMGN offers a great opportunity for long-term investors looking to take advantage of the boom in the GLP-1 drug sector. The stock is undervalued compared to the major players, but its upside potential depends on the success of MariTide. For investors with a higher risk tolerance, this could be an interesting entry point into an emerging market.