BMO Downgrades Amgen and BioNTech to Market Perform on Shifting Risk-Reward Outlook

BMO Capital Markets downgraded biopharmaceutical giants Amgen and BioNTech to Market Perform from Outperform on Tuesday, signaling that the risk-reward profile for both companies has become more balanced after recent developments. The investment bank cited limited near-term upside for Amgen following a significant stock run-up and a more challenging path forward for BioNTech's pipeline and post-pandemic revenue.

Amgen Faces Headwinds After Strong Rally

For Amgen, the downgrade comes after its shares have risen 34% year-to-date, outperforming both the S&P 500 and the NYSE Arca Pharmaceutical indexes, according to BMO. Analyst Evan Seigerman noted in the report that strong commercial execution is now the base case for the stock and is largely priced in. BMO maintained its price target of $450 for Amgen.

The bank highlighted several challenges for the company, including:

• Significant loss-of-exclusivity headwinds for key products like Prolia/XGEVA, Enbrel, Otezla, and Kyprolis.
• Questions about the competitiveness of its obesity drug, MariTide, following Phase 2 data, despite a potentially differentiated dosing schedule.

Compounding these concerns, Amgen's shares fell more than 5% in premarket trading Tuesday after Novartis announced its cholesterol drug pelacarsen failed a key study. The news raised investor concerns about Amgen’s similar experimental drug, olpasiran. Analysts at JPMorgan said the Novartis results lower expectations for olpasiran ahead of its late-stage data, expected in late 2027 or early 2028.

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BioNTech's Post-COVID Transition Challenges

BMO also cut BioNTech's rating to Market Perform and lowered its price target to $105. The downgrade was driven by the faster-than-expected erosion of revenue from its COVID-19 vaccine, Comirnaty, and increased uncertainty around its oncology pipeline.

BioNTech has repeatedly cut its Comirnaty revenue guidance, most recently by $400 million to a midpoint of $1.75 billion, due to soft global demand. BMO's model projects Comirnaty revenue will fall to about $629 million by 2027, well below the consensus estimate of $850 million. The report also pointed to a lack of de-risking data for its cancer drug pumitamig until 2028 and a crowded competitive field.

While BMO noted that BioNTech's substantial cash position of over $16 billion provides a valuation floor for the stock, the firm believes upside potential may be more challenged until its pipeline matures.