Amgen Inc.'s stocks fell on Monday, as a analyst no longer recommends buying this biotech giant, citing concerns that investors' optimism about a candidate obesity drug has been priced into the stock, with more downside risks than upside opportunities.

Truist analyst Srikripa Devarakonda downgraded the stock from a buy rating of the past 11 months to hold. However, she raised the target price from $320 to $333, but the new target price is only 1.4% higher than last Friday's closing price.

The stock fell 1.1% in early market trading, after rising 2.3% last Friday. So far this year, the stock has risen by 12.7%, while the iShares Biotechnology ETF (IBB) has risen by 6.9%.

Devarakonda mentioned that investors are currently focusing on the upcoming phase 2 clinical data for MariTide, in response to obesity drugs such as Amgen's Ozempic and Wegovy, Novo Nordisk's Novo Nordisk, and Eli Lilly & Co.'s Zepbound and Mounjaro.

Devarakonda expects that the phase 2 obesity data will demonstrate efficacy that is “consistent” with previous data. However, considering this is only phase 2 data, and factoring in competitive factors, “we think the current stock price levels already incorporate this opportunity.”

If the data ultimately “performs well,” Devarakonda believes the stock price could rise by approximately $20 to $40. But if the data is seen as “weak,” including being less effective than Zepbound, Devarakonda expects the stock price to potentially drop by $40 to $50.