Amgen has a promising growth outlook despite facing a “substantial patent cliff,” according to HSBC. HSBC initiated coverage on the drug treatment developer with a buy rating. Its price target of $320 suggests shares could rally 25% from Tuesday’s close. “Amgen is a best-in-class operator with high margins and a strong history of protecting its assets. While some very old products are finally facing patent cliffs it will likely be gradual and a broadened portfolio allows for continued growth,” analyst Morten Herholdt wrote in a Wednesday note. Amgen is set to lose exclusivity on patents for drugs that make up about three-quarters of the company’s sales. The analyst noted that this exposes Amgen to heavy patent losses in the medium term, but he thinks the company’s pipeline of new medications is “fuller than it has ever been.” “By 2025 the company should have four new blockbusters, all in different therapeutic areas, showcasing its underestimated R & D capability and providing the scale of sales necessary to offset expiring products,” he added. The company’s acquisition of Horizon Therapeutics will also help it extend sales and pipeline into the rare diseases market, Herholdt added. Due to the current investor skepticism with the looming patent cliff, Amgen shares are trading at an “undemanding” earnings multiple, according to the analyst. “We believe the company can deliver continuous growth in the process and faces lower risk than many in the current regulatory environment,” Herholdt said. Shares dipped 1% Wednesday during premarket trading. The stock is down 3.3% year to date. AMGN YTD mountain AMGN in 2023 — CNBC’s Michael Bloom contributed to this report.
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