Short Report on Amgen Stock

Amgen logged a -1.4% change during today's afternoon session, and is now trading at a price of $265.2 per share.

Amgen returned losses of -7.0% last year, with its stock price reaching a high of $291.6 and a low of $211.71. Over the same period, the stock underperformed the S&P 500 index by -22.0%. As of April 2023, the company's 50-day average price was $269.47. Amgen Inc. discovers, develops, manufactures, and delivers human therapeutics worldwide. Based in Thousand Oaks, CA, the large-cap Health Care company has 25,200 full time employees. Amgen has offered a 3.1% dividend yield over the last 12 months.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:

2018 2019 2020 2021 2022 2023
Revenue (MM) $23,747 $23,362 $25,424 $25,979 $26,323 $26,582
Gross Margins 43% 41% 36% 28% 36% 36%
Operating Margins 43.0% 41.0% 36.0% 28.0% 36.0% 36.0%
Net Margins 35.0% 34.0% 28.0% 23.0% 25.0% 30.0%
Net Income (MM) $8,394 $7,842 $7,264 $5,893 $6,552 $7,979
Net Interest Expense (MM) $1,392 $1,289 $1,262 $1,197 $1,406 $2,078
Depreciation & Amort. (MM) $1,946 $2,206 $3,601 $3,398 $3,417 $3,544
Earnings Per Share $12.62 $12.88 $12.31 $10.28 $12.11 $14.83
Diluted Shares (MM) 665 609 590 573 541 528
Free Cash Flow (MM) $10,558 $8,532 $9,889 $8,381 $8,785 $9,685
Capital Expenditures (MM) $738 $618 $608 $880 $936 $1,115
Net Current Assets (MM) $21,982 $2,787 $7,279 $4,515 $2,185 $26,182
Long Term Debt (MM) $29,510 $26,950 $32,895 $33,222 $37,354 $59,377
Net Debt / EBITDA 0.02 1.75 1.75 2.26 2.41 1.8

Amgen has weak revenue growth and increasing reinvestment in the business, decent operating margins with a stable trend, and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and EPS growth achieved by reducing the number of outstanding shares. Finally, we note that Amgen has irregular cash flows.

A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:

Amgen has a trailing twelve month P/E ratio of 19.2, compared to an average of 24.45 for the Health Care sector. Based on its EPS guidance of $18.37, the company has a forward P/E ratio of 14.7. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 2.7%. On this basis, the company's PEG ratio is 7.03, which suggests that it is overpriced. Furthermore, Amgen is likely overvalued compared to the book value of its equity, since its P/B ratio of 18.54 is higher than the sector average of 4.16. The company's shares are currently trading 303.8% above their Graham number.

Amgen Has an Average Rating of Buy:

The 23 analysts following Amgen have set target prices ranging from $170.44 to $309.55 per share, for an average of $255.96 with a buy rating. As of April 2023, the company is trading 5.3% away from its average target price, indicating that there is an analyst consensus of little upside potential.

Amgen has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 79.3% of the company's shares, and the insider ownership rate stands at 0.24%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $13,004,342,759.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.