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Amgen: Raising Our FVE to $268 on Obesity Drug Potential, Horizon Remains Neutral to Our Valuation

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Amgen Inc
(AMGN)

We’re raising our fair value estimate for Amgen AMGN to $268 from $255 after raising our sales forecast for Amgen’s obesity drug candidate AMG 133, along with our broader, more bullish view on the global obesity market potential. We assume AMG 133 sales of $2.6 billion on a probability-adjusted basis by 2032, using a 30% probability of approval in 2026. We also assume the pending Horizon acquisition could close around the end of 2023, which is neutral to Amgen’s wide moat and our valuation, bringing valuable rare disease and immunology drugs but at a steep $28 billion price tag. We expect negotiations to continue over the next few months, as the FTC could be looking for Amgen to make broader commitments regarding future bundling practices and Horizon’s portfolio and pipeline. We see Horizon’s portfolio of rare disease and immunology drugs generating combined sales north of $6 billion by 2028.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Karen Andersen

Strategist
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Karen Andersen, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She is responsible for biotechnology research.

Before joining Morningstar in 2005, Andersen received a master’s degree in business administration from Rice University, where she served as senior healthcare analyst for the M.A. Wright Fund and earned the distinction of Jones Scholar. She has scientific research experience in both academia (at Rice University and the University of Queensland in Australia) and industry (at Lexicon Genetics and a subsidiary of Genzyme).

Andersen also holds a bachelor’s degree in biochemistry from Rice University, where she graduated magna cum laude. She is a member of Phi Beta Kappa and holds the Chartered Financial Analyst® designation. She ranked first in the biotechnology industry, and had the highest score overall, in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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