Skip to Content
Stock Analyst Update

Amgen Undervalued After In-Line 1st Quarter

The wide-moat drugmaker's cash pile can support acquisitions to bolster growth in the face of biosimilar and branded pressure.


We’re maintaining our $198 per share fair value estimate and wide moat rating for  Amgen (AMGN) following steady first-quarter results, which reflected double-digit growth for newer franchises but continuing pressure on the three largest franchises (immunology drug Enbrel down 6%, and supportive care drugs Neulasta and Aranesp down 5% and 11%, respectively). We’ve slightly lowered our U.S. sales forecasts for Kyprolis, Aranesp, Enbrel, and Repatha, but a lower assumed tax rate and increases to our assumptions for several other drugs (Prolia, Vectibix, Nplate, and biosimilar Amjevita) balance the impact on our valuation. Overall, we expect Amgen to continue to struggle to see significant top-line growth given significant biosimilar and branded pressure, but investors are well aware of the challenges, and the firm has plenty of cash ($32 billion at the end of the quarter) to support acquisitions to bolster near-term growth.

Amgen is juggling several different types of uncertainties in 2018, from generic and biosimilar competition to drug reimbursement negotiations and business development strategy. Headwinds include the timing of U.S. Neulasta competition (we anticipate the second half of 2018, from Mylan), and U.S. Sensipar generic competition (we assume mid-2018). In the long run, however, Amgen has an interesting mix of drug candidates in less traditional areas of focus (cardiology, bone health) as well as oncology (one of the few drug developers who is testing both bispecific and CAR-T cell therapy approaches). While these programs continue to pass through clinical studies, Amgen will need support from continued growth of Prolia as well as a strong sales ramp for cholesterol-lowering drug Repatha (which has a new cardiovascular outcomes label in the U.S.) and migraine drug Aimovig (poised to launch following FDA approval in May).

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Karen Andersen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.