We recently compiled a list of the 12 Best Biotech Stocks To Invest In According To Hedge Funds. In this article, we are going to take a look at where Amgen Inc. (NASDAQ:AMGN) stands against the other biotech stocks.
As we have mentioned in our article, “10 Best Penny Stocks to Buy Under $1,” the size of the global biotechnology industry was assessed to be worth $1.38 trillion in 2023 and is expected to grow at a CAGR of 11.8% from 2024 to 2033, predicted to be worth around $4.25 trillion.
Specifically, the U.S. biotechnology market was forecast to be $246.18 billion last year, and at a CAGR of 11.6% from 2024 to 2034, it is expected to be worth approximately $830.31 billion as per Precedence Research. North America’s revenue share was 37.79%, while Asia Pacific produced a revenue share of 23.99%. In terms of revenue share by application, the biopharmacy segment had 41.73% in 2023, and the application segment for bioindustries accounted for 24.33% of total revenue. In terms of technology, the tissue engineering and regeneration market has projected a 19.26% revenue share for 2023.
According to stock analysis, there are 665 stocks in the biotechnology industry, with a combined market value of $1,559.75 billion and total sales of $127.6 billion.
However, the U.S. Food and Drug Administration and other drug authorities’ clearance decisions and research data have a significant impact on the future of these occasionally volatile equities.
It has always been necessary to have a high risk tolerance and the ability to wait years or even decades for results when investing in biotechnology stocks. The resilience of biotech investors has been put to the test by inconsistent results in recent years and thus far this year. According to Morningstar strategist Karen Andersen, biotech had a strong start to 2024, driven by an uptick in M&A and every indication that interest rates would begin to decline. However, the second quarter of 2024 has been more mixed for the industry, with rates appearing to be stabilizing rather than falling, despite ongoing (but improving) inflation. Higher rates typically deter investors from waiting for hazy returns on their biotech investments.
Andersen sees a lot of promising things in biotech as well as room for expansion, despite the recent mixed outcomes, stating:
“We still see tailwinds for the industry going forward. Smaller-cap names are still targets for acquisitions by bigger biopharma firms, and a wave of acquisitions has continued since late last year, particularly focused on oncology and immunology,” “We think obesity acquisitions are likely going forward, as big biopharma can bring development and commercialization expertise to multiple programs in midstage trials at small biotechs. Second, on a more fundamental level, new technologies and launches in new therapeutic areas are poised to boost productivity and drive biotech performance.”
Moreover, the report “Future of Biotech AI-driven Drug Discovery” states that artificial intelligence may drastically speed up drug research, cutting down on development timeframes from many years to a matter of years. Through the integration of artificial intelligence AI with drug development and biology, scientists can build customized therapies for patients. Instead of replacing scientists, AI will improve their skills by enabling them to automate repetitive operations and produce fresh insights. Companies need to go from isolated pilots to a complete, data-driven approach, integrating analytics into decision-making, and emphasizing quick, observable results that help patients and the scientific method in order to properly utilize AI.
Currently, more than 450 life sciences companies, classified as “startups” or “scaleups,” are actively utilizing machine learning and deep learning-based predictive and generative capabilities to enhance their research strategies, as per the findings of BioPharmaTrend’s report, “The State of Artificial Intelligence (AI) in the Biopharma Industry.”
Fitch Ratings also continues to maintain a neutral outlook on the global biotech industry for 2024. Despite rising interest rates, it expects growth driven by demographic trends and innovation. Although they are confronting difficulties with investment and regulation, Fitch highlights that companies are concentrating more on research and development as well as strategic changes that improve drug pricing.
Methodology:
We sifted through holdings of biotech ETFs and online rankings to form an initial list of 20 biotech stocks. Then we selected the 12 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A pharmacist filling a prescription for a complex drug developed by the company.
Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Investors: 69
Amgen Inc. (NASDAQ:AMGN) is an innovator in human therapies based on biotechnology. The immune system boosters Neupogen and Neulasta, the red blood cell boosters Epogen and Aranesp, and the anti-inflammatory medications Enbrel and Otezla are among the brand-name medications.
The company launched its first cancer treatment, Vectibix, in 2006 and currently sells the bone-strengthening medications Evenity (2019) and Prolia/Xgeva (approved in 2010). Kyprolis was added to the company’s therapeutic oncology portfolio with the acquisition of Onyx.
Repatha (reducing cholesterol), Aimovig (migraine), Lumakras (lung cancer), and Tezspire (asthma) are among the new products.
Tepezza, a medication for thyroid eye illness, is among the rare-disease medications brought by the 2023 Horizon acquisition. AMGN’s array of biosimilars is expanding as well.
The biotechnology company experienced double-digit increases in the second quarter of 2024 for several of its long-term growth drivers, including the medications Evenity for osteoporosis, Repatha for lowering cholesterol, Tezspire for asthma, and Blincyto for leukemia. Demand for all of these medications is rising, with Blincyto reaching more recently diagnosed patients and Tezspire branching out into other immunological indications (such as chronic obstructive pulmonary disease).
Amgen Inc. (NASDAQ:AMGN) increased its projection for FY 2024 operating EPS to between $19 and $20.20 and predicted $32.5 billion to $33.8 billion in total sales for the year. These numbers point to a promising future for Amgen’s earnings.
Although the company’s initial focus was on providing supportive care products to patients with cancer and renal disease, Amgen has now broadened its product line to include innovative drugs in a variety of therapeutic areas, including immunology and cardiology. Its most recent bestsellers, such as the cholesterol-lowering medication Repatha, protect its wide moat despite challenges from branded and biosimilar competitors.
As one of the “Best GLP-1 and Weight Loss Stocks to Buy Now,” Amgen is also advancing in the GLP-1 market with its obesity portfolio, which includes the products MariTide and AMG 133. These medications have the ability to compete with well-known names like Ozempic and Wegovy. Concerns, however, include potential risks from new product releases and clinical research, as well as slower sales of established medications like Enbrel.
Carillon Eagle Growth & Income Fund stated the following regarding Amgen Inc. (NASDAQ:AMGN) in its first quarter 2024 investor letter:
“Amgen Inc. (NASDAQ:AMGN) shares suffered after the company released detailed clinical data on the lead obesity drug in its pipeline. Although investors recognized the medication’s efficacy, there were some concerns regarding other aspects of the medication revealed by the data.”
Argus boosted Amgen’s price objective to $360 from $340, noting a solid pipeline, 26% YoY product volume growth in the second quarter of 2024, and future earnings potential from new drugs and purchases.
The company’s biggest shareholder is Ken Griffin’s Citadel Investment Group, with 1,432,100 shares worth $447.46 million.
Overall AMGN ranks 3rd on our list of the best biotech stocks to buy according to hedge funds. While we acknowledge the potential of AMGN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
