Is Amgen Stock Poised For A Rally?
Amgen (AMGN) stock is at an interesting point right now. It is trading at a discount. By investing, you are betting on a company with reasonable growth, sustained cash flow and margins, and a low debt-to-market-cap ratio. But is a cheap valuation enough?
Why Bet On AMGN Now?
The long thesis is predicated on the commercial success of Amgen’s growth portfolio (Repatha, Evenity, Tezspire) and the maturation of its late-stage pipeline, particularly the obesity drug MariTide, to replace and outgrow revenue lost from legacy products facing loss of exclusivity.
- Repatha sales grew 36% YoY in 2025, with Q4 growth accelerating to 44% YoY.
- Evenity sales grew 34% YoY in 2025.
- Amgen’s pipeline includes the high-potential obesity drug MariTide, targeting a market projected to reach over $75 billion by 2033.
- Management has a track record of consistently beating EPS estimates, suggesting conservative guidance and strong operational execution.
How Do The Fundamentals Look?
- Revenue Growth: 10.0% LTM and 11.9% last 3 year average.
- Operating Margin: Nearly 24.8% 3-year average operating margin.
- No Margin Shock: Amgen has improved in the last 12 months.
- Modest Valuation: Despite these fundamentals, AMGN stock trades at a PE multiple of 23.7
Below is a quick comparison of AMGN fundamentals with S&P medians.
| AMGN | S&P Median | |
|---|---|---|
| Sector | Health Care | – |
| Industry | Biotechnology | – |
| PE Ratio | 23.7 | 23.9 |
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| LTM* Revenue Growth | 10.0% | 6.8% |
| 3Y Average Annual Revenue Growth | 11.9% | 5.5% |
| LTM Operating Margin Change | 3.0% | 0.2% |
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| LTM* Operating Margin | 24.7% | 18.6% |
| 3Y Average Operating Margin | 24.8% | 18.1% |
| LTM* Free Cash Flow Margin | 22.0% | 14.2% |
*LTM: Last Twelve Months
The Bear View & The Current Investment Debate
The current investment debate on AMGN is centered around: Can the growth from new products and the pipeline outpace the accelerated, confirmed revenue erosion from biosimilar competition on legacy blockbusters like Prolia and Xgeva?
The prevailing sentiment is bearish. Strong volume growth in new products is mostly being negated by a wall of structural headwinds. Amgen’s legacy blockbusters (profit centers) are facing an accelerated decline in the face of biosimilar competition. The portfolio is facing persistent net price erosion. A new regulatory risk has emerged. This isn’t a growth story anymore; it’s a turnaround story with low visibility.
| Bull View | Bear View |
|---|---|
| Newer products (Repatha, Evenity) and the high-potential obesity drug, MariTide, will likely more than offset the legacy drug decline, leading to re-accelerated growth and margin expansion. | The biosimilar erosion will be faster and deeper than expected, while the pipeline fails to meet lofty expectations against entrenched, best-in-class competition from Eli Lilly. |
You can evaluate more on which view to bet on by visiting AMGN Investment Highlights & Full Analysis
AMGN Is Just One of Several Such Stocks
Not ready to act on AMGN? Consider these alternatives:
These stocks have strong operating margins, and are trading meaningfully below 1Y high with P/E below the S&P 500 median and P/S below the historical average.
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have resulted in average 6-month and 12-month forward returns of 12.7% and 25.8% respectively, with win rate (percentage of picks returning positive) of above 70%.
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