Amgen plays the anti-obesity drug cards. The risk of tariffs chaos

It's quarterly results season on the Nasdaq. Also for Amgen. The biotech giant releases its first quarter numbers on Thursday. Investors, on the one hand, will be looking at the final figures; and, on the other hand, they will want to understand what management's considerations - assuming there is no reluctance to talk - are regarding future prospects. Above all, with reference to the possible impacts of Donald Trump's pullback on tariffs.

Overall, the consensus average reported by SeekingAlpha forecasts a turnover of USD 8.04 billion. The non-GAAP earnings per share (EPS), on the other hand, is expected to stand at $4.26 (it had been $3.96 in the same period of 2024). With respect to EPS, SeekingAlpha reports that the group has managed to beat the consensus 13 times in the last 16 quarters. The figure should not impress too much. The market - in stock markets at all latitudes - tends to adjust estimates as the publication of results approaches. Nothing unlawful, for goodness sake! But the trend in question, by making it easier for the company to cross the bar, reduces the signalling value of the forecasts. Not only that. Given the paroxysmal context due to the self-induced variable of tariffs, attention must, never before, focus on the company's indications regarding the future.

Yes, the company's indications. But what signals are coming from the stock market multiples? Amgen's stock has, according to the Bloomberg terminal, a price-to-earnings ratio on 2025 of 13.47 times. This is well below the current P/e (30.18) and the 2024 P/e (30.08 times). A hint that the share is trading at a discounted prospective valuation? The reality is more complicated. Experts warn about one thing: the 2025 profitability forecasts so far have not been revised and hardly take into account - for example - the risk of stagflation in the US. In view of this, P/e being a ratio, it is very likely that the compression of the indicator is mainly due to the reduction of the numerator (price decline). As soon as the denominator (profit) is revised, the multiple -ceteris paribus- would widen; and, on the other hand, the stock would no longer seem so prospectively discounted.

In short: multiples - in the current volatility - must be understood and used cum grano salis. The 'mantra', on closer inspection, is grasped with the 'price-to-book value' itself. The latter, according to the Bloomberg terminal, currently travels above 25 times. It is a number that - in absolute terms - makes little sense, so high is it. However, it must be remembered that Amgen is a biotech company. That is to say, one that has made multiple acquisitions which, in turn, have brought Amgen significant goodwill. This, specifically, consists of the goodwill of the newly acquired companies, which includes, for example, the brand name, customer base or intellectual property not accounted for individually. Such intangible assets are included in the book value. Thus - as the denominator of the ratio expands - the multiple should all the more signal that the stock is expensive. In reality, - as traders expect significant corporate growth in the wake of the M&A - the market not infrequently pushes the numerator (the company's stock price) more than proportionally. This is the case - according to some experts - precisely with Amgen. Therefore, based on the 'price to book value', the company's reality could be interpreted in different ways. Against this, it makes more sense to look in the direction of, for example, cash flow and corporate profitability. Accounting entries which, evidently, bring the discourse back to the sides of the business trend, the product portfolio and its key drivers. Hence, also to management's next words regarding the company's prospects.

In this sense, one of the biggest curiosities concerns the progress in the development of MariTide, the anti-obesity drug. The sector - it is well known - is booming and has high potential. According to Goldman Sachs, it could be worth over $100 billion by 2030. Thus, it is not surprising that a race has sprung up for the production of weight-loss treatments. A race where some competitors have already launched their products on the market. Novo Nordisk has been driven, in the 2024 accounts, by the 'obesity care' area at the centre of which is Wegony. The division, according to the Bloomberg terminal, generated - at current exchange rates - a turnover of USD 9.4 billion. This compares with 6.04 billion in the previous year. A similar picture is replicated at Eli Lilly. The US pharmaceutical group also achieved an increase in turnover in 2024 thanks to its flagship molecule (Zepbound) in the area of obesity treatment. In such a context, Amgen's bet is to succeed in gaining a space in a market where - precisely - competitors already sell their products. Is the goal plausible? The opinions of the experts are spoken. Some, pointing to the fact that Amgen comes good last (phase III studies for MariTide have just begun), say that the company may have difficulty generating significant turnover in the sector. Others, however, point to the fact that - because Amgen has an innovative approach to the subject - its solution may help patients maintain weight loss with fewer injections. Thus Albion Financial - which owns Amgen's stock - predicts that MariTide could generate annual sales in the billions. Who's right? Hard to say. Not least because the drug in question is still in the approval phase. Certainly - again - it will be crucial to hear what management has to say on the subject.