Amgen Earnings: Strong Results and Positive Pipeline Data Support Our Valuation

We’re maintaining our $268 Amgen fair value estimate following solid 6% product sales growth in the second quarter, driven by 11% volume growth. Amgen’s biggest growth drivers in the quarter were asthma drug Tezpire, osteoporosis drugs Evenity and Prolia, and cholesterol-lowering drug Repatha. These drugs were able to counter relatively flat sales of immunology drugs Enbrel and Otezla, as well as declines in older branded supportive care drugs like Epogen and Neulasta and Amgen’s biosimilar versions of Roche’s Herceptin and Avastin. Overall, we see Amgen as slightly undervalued, as market uncertainty surrounding the pending Horizon Therapeutics acquisition is likely weighing on shares. We continue to believe the deal will close at the end of the year, although we see Federal Trade Commission pushback as a signal that any future large acquisitions in the industry will be scrutinized. We continue to see Amgen’s broad portfolio as supporting a wide moat.