Dec 16, 2021 12:00 AM PST

Investment Type
Risk Level
Rec. Price ($)


Company Overview: Amgen Inc. (NASDAQ: AMGN) is a biotechnology company dedicated to helping individuals suffering from severe disorders. The firm develops, manufactures, and distributes a variety of human treatments. It has become one of the world's premier independent biotechnology businesses, reaching millions of patients worldwide and creating a pipeline of potentially game-changing medications. ENBREL, Prolia, Otezla, XGEVA, Neulasta, Aranesp, Repatha, and KYPROLIS are its most well-known drugs.

AMGN Details

Key Takeaways from Q3FY21 (ended September 30, 2021)

  • Progress in Revenues: The company's total revenues in Q3FY21 were USD 6.71 billion, a 4.41% increase from USD 6.42 billion in Q3FY20, driven by higher unit demand for specific brands, including Prolia, Repatha and EVENITY.
  • Slight Drop in Bottomline: Net income was USD 1.88 billion in Q3FY21, compared to USD 2.02 billion during Q3FY20, representing a diluted EPS of USD 3.31.
  • Increase in Product Sales: AMGN witnessed an increase of 3.54% in product sales to USD 6.32 billion in Q3FY21 vs. USD 6.10 billion in Q3FY20, driven by double-digit volume growth across a number of its products, including Prolia, EVENITY, Repatha and MVASI.

Revenues & Gross Profit Key Highlights; Analysis by Kalkine Group

Recent Developments

  • AMGN released new data from its haematology pipeline on December 06, 2021. BLINCYTO, a BiTE (bispecific T-cell engager) immuno-oncology medication that targets CD19 surface antigens on B cells, showed superior overall survival in paediatric patients with relapsed acute lymphoblastic leukaemia in Phase 3 trials.
  • The DISCREET trial, a Phase 3 multicenter, placebo-controlled study to examine the efficacy of Otezla in individuals with moderate to severe genital Psoriasis and moderate to severe Plaque Psoriasis, reported positive top-line results on December 01, 2021. The kind and frequency of adverse events seen in this trial were consistent with Otezla's previously reported safety profile.
  • On December 01, 2021, AMGN announced that the US Food and Drug Administration (FDA) had approved the use of KYPROLIS in combination with DARZALEX FASPRO and dexamethasone for the treatment of adult patients with relapsed or refractory multiple myeloma who have had one to three lines of therapy.

Steady Dividends

  • AMGN announced an interim dividend of USD 1.94 per share on December 03, 2021, which will be paid on March 08, 2022, to shareholders of record on February 15, 2022. This is a 10% increase above what was paid in the preceding four quarters. Over the last five years, the company has regularly paid dividends, as also reflected in the chart below (every D represents a dividend payment):

Consistent Dividends (Data Source: REFINITIV)

Balance Sheet & Liquidity Position

  • Growth in Cash Balance: The company exited Q3FY21 with a cash balance (including marketing securities) of USD 12.92 billion, up 21.36% from USD 10.65 billion as of FY20 end.
  • Decline in Cashflow from Operations: Net operating cash inflow during 9MFY21 was USD 6.45 billion from USD 8.34 billion during 9MFY20.
  • Increase in Debt Profile: As of September 30, 2021, AMGN's total outstanding debt amounted to USD 37.58 billion, a 13.92% increase from USD 32.99 billion reported at the end of FY20.

Key Metrics: AMGN's EBITDA and net margins in Q3FY21 were 48.1% and 28.1%, up from 25.8% and 7.1% in Q2FY21, respectively. Its ROE improved to 22.9% in Q3FY21, from 5.3% in Q2FY21.

Profitability Profile; Analysis by Kalkine Group  

Top 10 Shareholders: The top 10 shareholders together form around 34.07% of the total shareholding, while the top 4 constitute the maximum holding. The Vanguard Group, Inc. and the BlackRock Institutional Trust Co., N.A. hold the maximum stake in the company at 8.31% and 5.58%, respectively, as also highlighted in the chart below: 

Top 10 Shareholders; Analysis by Kalkine Group

Risk Analysis

  • Dependence on Third-Party Payers: The availability and scope of coverage and payment from third-party payers, such as government healthcare programs and commercial insurance plans, are critical to the company's product sales. Continued public scrutiny of medication prices and other healthcare costs, together with payer dynamics, are expected to limit AMGN's ability to alter product prices, which could have a significant negative impact on its operations and cash flows.
  • Distributor Concentration Risk: The overwhelming bulk of the company's US product sales is made to three pharmaceutical product wholesaler-distributors: AmerisourceBergen, McKesson and Cardinal Health. As a result, losing any of these essential distributors could harm the company's sales and cash flows.
  • Manufacturing Facility Concentration: Its production facilities' ongoing and efficient functioning, particularly those in the US territory of Puerto Rico and Thousand Oaks, California, is critical to the global supply of its product candidates for commercial sales and clinical studies. A significant disruption in the company's capacity to operate its manufacturing facilities might harm its ability to supply product candidates for use in clinical trials, causing delays in product development.
  • Intense Competition: Some of AMGN's competitors may have advantages in technology development, and consolidation among pharmaceutical and biotechnology businesses can amplify these advantages. These advantages may make it difficult for AMGN to compete successfully in product development, marketing, and discovery. If it cannot compete successfully, sales may suffer, resulting in a material adverse impact on its operations.


  • Looking ahead, AMGN anticipates revenues of USD 25.8 – 26.2 billion in FY21. On a GAAP basis, it expects EPS to be about USD 9.55 – 10.21 and USD 16.50 – 17.10 on a non-GAAP basis.
  • On the outflow side, the company expects to spend around USD 900 million in FY21 on capital expenditures. Share repurchases will be on the upper end of the USD 3.0 – 5.0 billion range.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock remained relatively stable throughout the year. However, in the past nine months, AMGN corrected ~12.47%. The stock is currently leaning towards the lower band of its 52-week range of USD 198.64 to USD 276.69. We have valued the stock using the Price/Earnings-based illustrative relative valuation method and arrived at a target price with an upside of low twenties (in percentage terms). We believe that the company can trade at a premium compared to its peer's average, considering its market dominance in the biologics space, robust profitability margins, and global market presence. We have taken peers like AbbVie Inc. (NYSE: ABBV), Moderna, Inc. (NASDAQ: MRNA), and others. Considering the robust top-line performance, proven track record, strong return profile, associated risks, and current valuation, we give a "Buy" recommendation on the stock at the current price of USD 213.80, up ~0.03%, as of December 15, 2021, 9:41 AM ET.

AMGN Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.


Kalkine Equities LLC provides general information about companies and their securities. The information contained in the reports, including any recommendations regarding the value of or transactions in any securities, does not take into account any of your investment objectives, financial situation or needs. Kalkine Equities LLC is not registered as an investment adviser in the U.S. with either the federal or state government. Before you make a decision about whether to invest in any securities, you should take into account your own objectives, financial situation and needs and seek independent financial advice. All information in our reports represents our views as at the date of publication and may change without notice.

Kalkine Media LLC, an affiliate of Kalkine Equities LLC, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.