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.
Key Takeaways from Q3FY21 (ended September 30, 2021)
Revenues & Gross Profit Key Highlights; Analysis by Kalkine Group
Consistent Dividends (Data Source: REFINITIV)
Balance Sheet & Liquidity Position
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
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.
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