Amgen Inc. (AMGN): what the price requires
At today's price, Amgen Inc. (AMGN) is priced for +5.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-13 · Source: https://boothcheck.com/report/AMGN
Headline
| Field | Value |
|---|---|
| Ticker | AMGN |
| Company | Amgen Inc. |
| Current price | $361.01/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 6.8% |
| Operating margin today | 25.4% |
| Margin compression implied | -18.6pp |
| Implied growth | 5.8% |
| Multiple paid | 23x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.3pp.
Reconcile: at the x-ray's 9.3% required return this reads ~21.1%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.01σ |
| cohort percentile (of 112 peers) | 57 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.86x | 4 | expensive |
| Earnings | 4.65x | 3 | expensive |
| Relative | 0.99x | 2 | justifies |
| Growth | 1.02x | 1 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $505.62 | 0.71x | no | FCF base $9.2B, growth 9% (input: historical growth), terminal g 4.0%, WACC 7.2%, 6yr projection |
| DCF Exit Multiple | Growth | $422.28 | 0.85x | no | Exit EV/EBITDA: 14.0x / 16.0x / 18.0x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $368.35 | 0.98x | yes | P/E 24x (sector median), scenarios: 20.0x / 24.0x / 28.0x (bear / base = sector held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $354.11 | 1.02x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $155.01 | 2.33x | yes | BV/sh $16.89, ROE (TTM) 84.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $836.42 | 0.43x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $303.91 | 1.19x | no | Rev $37.2B, growth 9% (input: historical growth; tapered), Terminal P/S: 4.4x / 5.3x / 6.1x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $502.95 | 0.72x | no | EPS $14.37, growth 35% (input: historical EPS growth), PEG=0.72 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $97.19 | 3.71x | no | Normalized EBIT (5y avg op income, one-time charges added back) $8.66B × (1−13%) / WACC 7.2% → EPV (no growth) |
| Residual Income | Asset | $259.81 | 1.39x | yes | BV $16.89 + 5yr PV of (ROE (TTM) 84.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $73.91 | 4.88x | yes | √(22.5 × EPS $14.37 × BVPS $16.89) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $361.58 | 1.00x | yes | EBITDA $15.46B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $77.61 | 4.65x | yes | FCF $8597.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $67.99 | 5.31x | yes | SBC-adj FCF $8.11B (FCF $8.60B − SBC $0.48B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $463.67 | 0.78x | yes | EPS $14.37 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $9.07 | 39.80x | yes | BV $16.89 × (ROIC 3.9% / WACC 7.2%) (excluded from median) |
| P/Sales Sector | Relative | $273.68 | 1.32x | no | Revenue $37.22B × sector P/S 4.0x |
| PEG Fair Value | Relative | $538.88 | 0.67x | no | EPS $14.37 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $155.35 | 2.32x | no | EPS $14.37 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $45.3b |
| Net debt / NOPAT (after-tax) | 5.75x |
| Net debt / operating income (pre-tax) | 5.02x |
| Interest coverage | 3.3x |
| Share count CAGR (buyback) | -0.3% |
| Burning cash | no |
Bullet Takeaways
- Amgen has rebuilt its growth around a handful of newer products: its six key growth drivers grew 24% year over year and generated $5.6 billion in the most recent quarter, almost 70% of total product sales, which is the engine carrying the company past its older, patent-exposed franchises.
- The largest single risk is the balance sheet behind that growth: net debt sits near $45 billion, roughly 4.3 times operating income, with interest coverage under 4 times, a load taken on for acquisition and now being worked down rather than ignored.
- What moves the story next is binary and clinical: the obesity candidate MariTide is the swing factor on the long-duration bet the price embeds, and its trial readouts over the coming quarters will do more to the thesis than any quarter of in-line sales.
Bull Case
Start with the loudest bear argument, because the data partly disarms it. The standard worry on any large biotech is the patent cliff: blockbuster drugs lose exclusivity, biosimilars undercut them, and revenue rolls over. Amgen's own filing is blunt that this pressure is rising, warning that manufacturers of biosimilars "may in the future attempt, to compete with our products by offering greater discounts or rebates," and that policy could tilt further toward facilitating "generic and biosimilar approval and commercialization." The bull response is not to deny the cliff but to point at what is already replacing the assets falling off it. The six key growth drivers grew 24% year over year and delivered $5.6 billion in the most recent quarter, close to 70% of total product sales. The newer portfolio is already the majority of the business, not a promise about the future.
The individual prints show the breadth. Repatha, the cholesterol franchise, grew 34% to $876 million in the quarter; Evenity, the bone drug, rose 27% to $562 million; Tezspire, in asthma, grew 20% to $343 million. Three different therapeutic areas, all compounding double digits, which is what a diversified replacement engine looks like rather than a single product propping up the headline. Management has matched that with raised full-year guidance, lifting 2026 revenue to a range of $37.1 to $38.5 billion and non-GAAP EPS to $21.70 to $23.10. A company raising guidance early in the year is signaling confidence in the trajectory, not defending a number.
Behind the marketed products sits the optionality the price is partly paying for. Amgen describes a year in which it "advanced our innovative pipeline; and continued to expand and enhance our world-class manufacturing network," and the obesity candidate MariTide is the most consequential piece of it: a monthly or less-frequent injectable in a market that today rewards convenience. If MariTide reads out well, it adds a growth vector in one of the largest drug markets in the world. The company also holds roughly $4.7 billion of equity investments outside its operating segments, a separate pool of value that does not depend on any single drug's commercial success.
Bear Case
The capital-allocation question is where the bear case starts, because Amgen took on a large debt load to buy growth and is now living with the consequences. Net debt sits near $45 billion against about $10.6 billion of trailing operating income, roughly 4.3 times, with interest coverage under 4 times. That is a meaningful claim on cash flow before a dollar reaches shareholders, and it is why the share count has barely moved: with leverage this high, the cash that might have funded buybacks is funding deleveraging instead. The filing documents the work in progress, with the company having "retired $2.3 billion of debt, consisting of $1.5 billion of debt repayments and $881 million of debt repurchases" in one recent year and continuing to repurchase notes across its maturity stack. The deleveraging is real, but so is the math: until it is further along, the balance sheet caps capital return and amplifies any revenue disappointment.
The revenue disappointment the bear fears is structural, not cyclical. The price embeds company-wide operating growth of about 4.2% a year for five years, and the catch is duration: that near-term pace is within what Amgen has delivered, but the stretch is in how long it must persist while the patent estate erodes underneath it. The filing is explicit that exclusivity dates "may be challenged, invalidated or circumvented by competitors" and that biosimilar competition continues to increase. Each older franchise that loses protection forces the growth drivers to run faster just to keep the consolidated number flat. The bet the price makes is that the new portfolio out-grows the old one's decay for the better part of a decade, which is exactly the kind of long persistence that rarely holds across a full patent cycle.
The valuation methods see the tension plainly. The asset-value and earnings-power lenses both read the price as expensive: stripped of the growth assumption, the company's book value and current earnings power do not support the level. Only the relative-multiple and growth-discounted-cash-flow methods justify it, and the growth method gets there by crediting the durability the bear is questioning. A reader who wants the price defended has to lean on exactly the assumption, sustained mid-single-digit growth through the cliff, that the rest of the bear case puts in doubt.
Valuation
At the current price the market is paying about 22 times company-wide operating income, which inverts to roughly 4.2% operating growth a year for five years. The notable feature is not the rate but its duration. Against Amgen's own recent history, mid-single-digit growth is within what it has delivered; the demand the price makes is that it persist for years while older franchises lose exclusivity, which against its sector places the multiple in the upper half of the peer range. The bet is on durability, not acceleration.
The methods we use to triangulate split cleanly, and the split is the information. The asset-value lens reads the price well above book, and the earnings-power lens, which capitalizes current operating earnings without crediting future growth, reads it as substantially expensive. Those two say the price is not supported by what the company is today. The relative-multiple lens, comparing Amgen to its large-pharma peers, and the growth-discounted-cash-flow lens both reach the price, the latter only by crediting the multi-year growth the inversion describes. So the price is defended by exactly two of the four families, and both of them are forward-looking. That is a coherent picture: a mature, cash-generative drug company whose price rests on the new portfolio out-growing the old one's decline, with the static methods structurally unable to frame that bet.
Solvency is the load-bearing constraint and belongs in the close. Net debt near $45 billion, about 4.3 times operating income, with coverage under 4 times, is the highest-stakes number in the file. It does not threaten the company, but it removes the cushion: a clean balance sheet lets a pharma name absorb a pipeline setback or a faster-than-expected biosimilar erosion, and Amgen's does not have much give. The share count has been roughly flat while debt comes down, which tells you where the cash is going. Set against the roughly $4.7 billion of off-operating equity stakes that anchor the downside, the picture is a company whose value rests on sustained growth through the patent cycle, carried on a balance sheet that leaves little room for the growth to stumble.
Catalysts
The first-quarter 2026 print was the most recent hard event and it beat, with EPS of $5.15 against a $4.80 consensus, a roughly 7% surprise, and management raising full-year guidance alongside it to $37.1 to $38.5 billion of revenue and $21.70 to $23.10 of non-GAAP EPS. The beat was driven by the growth drivers rather than a one-time item, which is the quality of beat that supports a guidance raise. Worth noting for discipline: those EPS figures are the company's non-GAAP measure, useful as a directional read on management's confidence but not the GAAP earnings the rest of this report is built on.
The catalyst that actually moves the long-duration bet is clinical, not quarterly. MariTide, Amgen's obesity candidate, is positioned as a monthly or less-frequent injectable, and management has framed the program as enrolling well with studies advancing toward the data needed to support future regulatory filings. Obesity is the single largest addressable market in the company's pipeline, and a clean readout would add a growth vector precisely where the price needs durability. The watch list over the next several quarters is therefore two-tracked: the marketed growth drivers holding their double-digit pace, and the MariTide data that determines whether the decade-long growth assumption the price embeds has a new pillar under it.
Peer Cohorts (Per Segment, With Filing Citations)
Amgen (consolidated) (reported)
- BIIB (BIOGEN INC.)
- (no filing in the citation store)
- GILD (GILEAD SCIENCES, INC.)
- (no filing in the citation store)
- BNTX (BioNTech SE)
- (no filing in the citation store)
- BMY (Bristol-Myers Squibb Company)
- (no filing in the citation store)
- ABBV (AbbVie Inc.)
- (no filing in the citation store)
- LLY (ELI LILLY & Co)
- (no filing in the citation store)
- PFE (Pfizer Inc.)
- (no filing in the citation store)
- JNJ (Johnson & Johnson)
- (no filing in the citation store)
Article Insight (Recent News Sentiment)
Sentiment score: 42.00 (MEDIUM confidence) FUD/Hype: FUD_DETECTED (Guggenheim’s price target cut and emphasis on biosimilar competition and obesity market challenges introduce a cautious tone.) Claim alignment: MIXED
These articles collectively signal moderate caution regarding Amgen’s near-term prospects, primarily driven by competitive pressures and pipeline execution risk.
247wallst.com & theglobeandmail.com (combined)
- Scope: Analyst revisions following Q1 2026 earnings, focusing on price targets and growth concerns.
- Data: Guggenheim lowered PT to $340; consensus PT is $353.43, a 9.3% upside.
- Verdict: Challenges the thesis by highlighting analyst skepticism, but doesn’t invalidate core cash flow argument.
blockonomi.com
- Scope: Details Amgen’s $300M investment in its Puerto Rico manufacturing facility.
- Data: Total U.S. manufacturing investment now exceeds $3.65 billion over the past year.
- Verdict: Validates the capital allocation strategy outlined in the report, supporting future margin expansion.
theglobeandmail.com (second instance)
- Scope: Additional analyst commentary on Amgen, Phathom, and Zimmer Biomet.
- Data: Citi maintains a Hold rating with a $345 target; average analyst target is $364.35.
- Verdict: Irrelevant to the core thesis; reiterates existing analyst sentiment.
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Amgen Q1 2026 earnings release, May 2026 · Amgen Q1 2026 earnings call, May 2026