Amgen Inc.

AMGN Details

Amgen Inc. (NASDAQ: AMGN) is a biotechnology business focused on assisting people with serious illnesses. The company creates, manufactures, and sells a wide range of human treatments. It has grown into one of the world's most successful independent biotechnology companies, reaching millions of patients globally and developing a pipeline of potentially game-changing drugs. Its most well-known medications are ENBREL, Prolia, Otezla, XGEVA, Neulasta, Aranesp, Repatha, and KYPROLIS.

Latest News:

• Regulatory Approval: On January 20, 2022, AMGN announced that  LUMAKRAS had been approved in Japan to treat KRAS G12C-mutated positive, unresectable, advanced non-small cell lung cancer (NSCLC) that has progressed following systemic anticancer therapy.
• Availability of TEZSPIRE in the US: On January 13, 2022, AMGN and AstraZeneca stated that TEZSPIRE is currently available for shipping to wholesalers in the US. TEZSPIRE was authorised by the US Food and Drug Administration (FDA) on December 17, 2021, for the maintenance treatment of severe asthma in adults and children aged 12 and above.
• Strategic Collaboration: On January 11, 2022, AMGN entered into a research partnership with Arrakis Medicines to discover and develop RNA degrader therapeutics for a variety of difficult-to-treat targets across various therapeutic areas. This novel targeted RNA degrader selectively eliminates RNAs encoding disease-causing proteins by encouraging their closeness to nucleases. 

Q3FY21 Results:

• Progress in Revenues: AMGN reported YoY growth of 4.41% in revenue to USD 6.71 billion in Q3FY21 (ended September 30, 2021) from USD 6.42 billion in Q3FY20, attributable to product sales-driven improvement by strong 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.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents (including short-term investments) of USD 12.92 billion and total debt of USD 37.58 billion.

Risks:

• Dependence on Third-Party Payers: The company's product sales are dependent on the availability and scope of coverage and payment from third-party payers, such as government healthcare programs and private insurance plans. AMGN's capacity to change product prices is projected to be limited by public scrutiny of medicine prices and other healthcare costs, as well as payer dynamics, which might have a significant negative impact on its operations and cash flows.
• Manufacturing Facility Concentration Risk: AMGN's production facilities' continued and efficient operation, notably those in the US territories of Puerto Rico and Thousand Oaks, California, is vital to the global supply of product candidates for commercial sales and clinical studies. A significant disruption in the company's ability to operate its production facilities could jeopardize its ability to supply product candidates for clinical trials, resulting in product development delays.

Outlook:

• FY21 Guidance: AMGN expects to generate revenue of USD 25.8 – 26.2 billion and EPS of USD 9.55 – 10.21 and USD 16.50 – 17.10 on a GAAP and non-GAAP basis. It also expects to incur a capital expenditure of ~USD 900 million.

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

AMGN's stock price has increased 4.85% in the past three months and is currently trading close to the mid-band of its 52-week range of USD 198.64 to USD 261.00. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 253.31.

Considering the slight movement in the stock price, regulatory approval in Japan, availability of TEZSPIRE in US, strategic collaboration, encouraging outlook, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 228.715, up 0.02% as of February 02, 2022, 03:30 PM ET.

Three-Year Technical Price Chart (as on February 02, 2022, at 03:30 PM ET). Source: REFINITIV, Analysis by Kalkine Group

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.