Amgen Inc. (AMGN) presents a nuanced valuation profile when assessed against both its historical trading patterns and its industry peers. While its Price-to-Earnings (P/E) ratio of 22.8x and Enterprise Value-to-EBITDA (EV/EBITDA) of 12.9x are slightly below their respective 5-year averages, suggesting a modest discount relative to its own history on these metrics, its Price-to-Book (P/B) ratio of 20.34x stands considerably above its 5-year average of 16.32x. This indicates that investors are currently assigning a higher value to Amgen's assets compared to its past. The overall 'Expanding' valuation trend signals increasing market optimism or a greater willingness to pay for Amgen's future prospects, potentially driven by perceived stability, growth potential, or pipeline strength.
Compared to its peer group, Amgen trades at a notable premium across key valuation multiples. Its P/E is 22.7% higher than the peer median of 18.6x, and its EV/EBITDA is 2.0% above the peer median of 12.7x. The most significant premium is observed in its P/B ratio, which is an striking 288.1% higher than the peer median of 5.24x. This 'Premium' peer position suggests that the market views Amgen as a higher-quality asset, potentially warranting a richer valuation due to factors such as a strong product portfolio, robust cash flows, or a superior competitive position. However, such a substantial premium, particularly on P/B, warrants careful consideration to ensure it is adequately supported by fundamental strengths and future growth prospects.
Key Findings
- Amgen's Price-to-Earnings (P/E) ratio of 22.8x and Enterprise Value-to-EBITDA (EV/EBITDA) of 12.9x are trading modestly below their respective 5-year historical averages, suggesting a slight discount relative to its past on these earnings and cash flow-based metrics.
- Conversely, Amgen's Price-to-Book (P/B) ratio of 20.34x is significantly elevated compared to its 5-year average of 16.32x, indicating a higher valuation placed on its assets by the market.
- Amgen trades at a premium across all primary valuation multiples (P/E, P/B, EV/EBITDA) relative to its industry peers, with its P/B ratio commanding an exceptionally high premium of 288.1% against the peer median of 5.24x.
- The 'Expanding' valuation trend suggests that investor sentiment towards Amgen is improving, leading to a higher willingness to pay for its earnings and assets over time, which often signals positive market expectations for future performance.
Company Valuation Highlights
AMGN:
Amgen trades at a mixed valuation against its own history, with its P/E (22.8x) and EV/EBITDA (12.9x) slightly below their 5-year averages, indicating a potential modest historical discount. However, its P/B (20.34x) is considerably higher than its historical average, suggesting a premium on an asset basis. When compared to peers, Amgen commands a significant premium across all metrics, notably a 288.1% higher P/B ratio than the peer median. This premium, coupled with an 'Expanding' valuation trend, implies strong market confidence in Amgen's long-term value, potentially driven by its robust pipeline, market leadership, and financial stability. Investors should evaluate if the substantial peer premium, especially on P/B, is fully justified by its fundamental outlook and growth trajectory.
| Company |
P/E |
Hist Avg |
Fwd P/E |
PEG |
P/B |
EV/EBITDA |
P/S |
Position |
| AMGN |
22.8x |
24.7x |
16.3x |
0.52x
|
20.34x |
12.9x |
4.79x |
Fair Value
|
Historical Percentile Position
Where current multiples sit relative to full historical range (higher percentile = more expensive vs history)
| Company |
P/E %ile |
P/E Range |
P/B %ile |
P/B Range |
EV/EBITDA %ile |
P/S %ile |
| AMGN |
64th
|
14.2x - 64.2x
|
64th
|
3.66x - 38.6x
|
36th
|
18th
|
Peer Valuation Comparison
How each company's valuation compares to its industry peers
AMGN vs 10 Peers
Premium
P/E Ratio
22.8x
Peer Median: 18.6x
(+22.7%)
P/B Ratio
20.34x
Peer Median: 5.24x
(+288.1%)
EV/EBITDA
12.9x
Peer Median: 12.7x
(+2.0%)
P/S Ratio
4.79x
Peer Median: 3.98x
(+20.3%)
View all 10 peers
| Peer |
P/E |
P/B |
EV/EBITDA |
P/S |
Market Cap |
| AMGN |
22.8x |
20.34x |
12.9x |
4.79x |
- |
| GILD |
21.0x |
7.90x |
15.2x |
6.07x |
$178.7B |
| PFE |
19.8x |
1.78x |
13.1x |
2.46x |
$153.8B |
| SNY |
8.8x |
1.31x |
9.6x |
1.58x |
$92.2B |
| MRK |
15.8x |
5.48x |
12.3x |
4.40x |
$286.3B |
| DHR |
38.3x |
2.63x |
21.9x |
5.63x |
$138.2B |
| BMY |
17.4x |
6.66x |
11.0x |
2.55x |
$122.8B |
| NVO |
10.8x |
5.68x |
7.5x |
3.56x |
$1.10T |
| BSX |
36.6x |
4.37x |
23.7x |
5.27x |
$105.9B |
| GSK |
14.3x |
5.00x |
8.1x |
2.50x |
$81.8B |
| NVS |
21.7x |
6.59x |
14.4x |
5.39x |
$303.0B |
| Peer Median |
18.6x |
5.24x |
12.7x |
3.98x |
- |
Amgen Inc. (AMGN) presents an Enterprise Value (EV) of $221.57 billion, which encompasses both its equity market capitalization and its net debt. The market capitalization stands at $204.45 billion, while the company carries a net debt position of $45.48 billion, derived from total debt of $54.60 billion offset by cash holdings of $9.13 billion. The fact that AMGN's Enterprise Value is notably higher than its Market Capitalization indicates that debt plays a significant role in the overall funding structure of the company, contributing substantially to its total value.
From a valuation multiples perspective, Amgen trades at an EV/EBITDA of 12.9x and an EV/Sales of 6.03x. The EV/EBITDA multiple suggests that the market values Amgen at 12.9 times its annual earnings before interest, taxes, depreciation, and amortization, which is a common measure of operational cash flow. The EV/Sales multiple indicates that the enterprise is valued at 6.03 times its annual revenue. These multiples reflect the market's assessment of Amgen's operational profitability and revenue generation capacity, taking into account its entire capital structure.
Given the single-company analysis, direct comparison of these EV multiples against peers is not possible within this report. However, for a biopharmaceutical company with established products and a robust pipeline, these multiples generally suggest a moderate to robust valuation, implying that investors are willing to pay a premium for Amgen's stable earnings and revenue streams, while also factoring in its leverage.
Key Findings
- Amgen's Enterprise Value of $221.57 billion is significantly influenced by its net debt of $45.48 billion, which constitutes approximately 20.5% of its total enterprise value.
- The company's EV/EBITDA multiple of 12.9x and EV/Sales multiple of 6.03x suggest the market attributes a substantial valuation to Amgen's operational performance, considering its entire capital base.
- Amgen's Net Debt/EBITDA ratio of 2.65x is categorized as 'High,' indicating a considerable reliance on debt financing relative to its operational earnings.
Leverage Assessment
Amgen's capital structure shows a 'High' leverage tier, with a Net Debt/EBITDA ratio of 2.65x. This ratio signifies that it would take approximately 2.65 years of the company's EBITDA to cover its net debt. While debt can be a cost-effective way to finance growth and operations, this level of leverage introduces financial risk, particularly if Amgen's cash flows were to contract or if interest rates were to rise significantly. Investors should closely monitor Amgen's debt servicing capabilities, free cash flow generation, and its strategy for managing its debt load, especially in the context of its substantial total debt of $54.60 billion. The high leverage suggests that a portion of the company's enterprise value is supported by this debt, which warrants careful consideration in the overall risk assessment.
| Company |
Market Cap |
EV |
Net Debt |
EV/EBITDA |
Hist Avg |
EV/Sales |
EV/FCF |
Leverage |
| AMGN |
$204.45B |
$221.57B |
$45.48B
|
12.9x |
13.1x |
6.03x |
27.4x |
High
|
Leverage Analysis
| Company |
Net Debt/EBITDA |
Hist Avg |
Hist Range |
Debt % of EV |
Leverage Tier |
| AMGN |
2.65x
|
2.56x |
1.89x - 3.63x
|
24.6% |
High
|
Our valuation analysis for Amgen Inc. (AMGN) utilizes a Discounted Cash Flow (DCF) model, incorporating both historical free cash flow (FCF) trends and forward-looking analyst estimates. The current economic environment, characterized by a 10-year Treasury yield of 4.15% and a BAA credit spread of 1.75%, contributes to a dynamic Market Risk Premium of 3.25%. While the risk-free rate is higher than the ultra-low levels observed in 2020-2021, the relatively tight BAA spread suggests a somewhat risk-on sentiment, leading to a calculated Weighted Average Cost of Capital (WACC) of 5.47% for Amgen. This WACC is a critical component in discounting future cash flows, reflecting the required rate of return for investors in the current rate environment.
Amgen's DCF models present a compelling case for potential undervaluation. The Historical DCF, which projects FCF based on a conservative 10-year CAGR of -0.4%, yields an intrinsic value of $658.07, suggesting a substantial 73.5% upside from the current market price of $379.27. Even more striking is the Analyst DCF, which incorporates analyst revenue estimates and Amgen's historical FCF margin, resulting in an intrinsic value of $865.37—a remarkable 128.2% upside. The significant divergence between these two DCF approaches highlights a key narrative: while Amgen's historical FCF growth has been stagnant or slightly negative (5-year CAGR of -3.9%), market analysts hold a considerably more optimistic view regarding its future FCF generation. This optimism likely stems from expectations of new product launches, pipeline advancements, or strategic initiatives that are anticipated to drive renewed growth.
This discrepancy suggests that the market may currently be pricing Amgen more in line with its past FCF performance, perhaps reflecting skepticism about its ability to reverse historical trends or concerns over factors like patent expirations or competitive pressures. Conversely, analysts appear to be factoring in specific catalysts that have yet to be fully embraced by the broader market. The consistent historical buyback rate of 2.4% per year, factored into both models, further enhances the per-share value by reducing projected shares outstanding. Given the substantial upside indicated by both DCF methodologies, Amgen appears to be a strong candidate for further investigation by investors who believe in its future growth prospects beyond its historical FCF trajectory.
Key Findings
- The current higher rate environment (10Y Treasury at 4.15%) influences discount rates, yet Amgen's WACC of 5.47% is moderated by a relatively low dynamic Market Risk Premium of 3.25% due to tight credit spreads.
- Both DCF models indicate significant undervaluation for Amgen: the Historical DCF suggests 73.5% upside ($658.07), while the Analyst DCF points to 128.2% upside ($865.37) from its current price of $379.27.
- The substantial difference between the Historical DCF (using a 10-year FCF CAGR of -0.4%) and the Analyst DCF highlights a strong divergence in growth expectations, with analysts projecting a significant improvement in future FCF generation not reflected in past performance.
- The market's current pricing of Amgen may be more aligned with its historical FCF challenges, suggesting a cautious stance, while analysts are likely anticipating specific growth catalysts such as new drug approvals or strategic acquisitions.
DCF Verdicts by Company
AMGN:
Significantly Undervalued
Risk-Free Rate (10Y Treasury):
4.15%
Market Risk Premium:
3.25%
BAA Spread:
1.75%
Terminal Growth Rate:
Varies by sector (2.0% - 3.5%)
Methodology Note:
- Market Risk Premium: Calculated dynamically based on credit spreads.
Formula:
ERP = 3.0% + (BAA Spread - 1.5%).
When spreads are tight, ERP is lower; when spreads widen, ERP increases.
- Terminal Growth Rate: Sector-based assumptions:
Technology, Communication Services: 3.5% |
Healthcare, Consumer Cyclical: 3.0% |
Industrials, Financials, Consumer Defensive, Materials: 2.5% |
Energy, Utilities, Real Estate: 2.0%
- Shares Outstanding: Adjusted for historical buyback trends when applicable.
| Company |
Current Price |
Historical DCF |
Upside |
Analyst DCF |
Upside |
Verdict |
| AMGN |
$379.27 |
$658.07 |
+73.5%
|
$865.37 |
+128.2%
|
Significantly Undervalued
|
AMGN – Amgen Inc.
WACC Calculation
| Risk-Free Rate (Rf) |
4.15% |
| Beta (β) |
0.47 |
| Market Risk Premium |
5.50% |
| Cost of Equity (Ke = Rf + β × MRP) |
5.68% |
| Cost of Debt (after-tax) |
4.66% |
| WACC |
5.47% |
Historical Free Cash Flow
| Metric |
2021 |
2022 |
2023 |
2024 |
2025 |
| FCF ($B) |
$8.4B |
$8.8B |
$7.4B |
$10.4B |
$8.1B |
| FCF Margin (%) |
32.3% |
33.4% |
26.1% |
31.1% |
22.0% |
FCF CAGRs:
5Y: -3.9% |
10Y: -0.4%
| Avg FCF Margin (5Y): 29.0%
DCF Valuation (Two Methods)
| Component |
Historical Method
(10Y CAGR projection) |
Analyst Method
(Revenue × FCF Margin) |
| Growth Assumption |
3.0% (normalized) (10Y CAGR) |
Analyst Revenue Est. × 29.0% margin |
| PV of Projected FCF |
$40.16B |
$50.98B |
| Terminal Value |
$416.87B |
$531.89B |
| PV of Terminal Value |
$319.44B |
$407.57B |
| Enterprise Value |
$359.60B |
$458.55B |
| (-) Net Debt |
$45.48B |
$45.48B |
| Equity Value |
$314.12B |
$413.08B |
| Intrinsic Value per Share |
$658.07 |
$865.37 |
| vs Current Price ($379.27) |
+73.5%
|
+128.2%
|
Sensitivity Analysis (Historical Method)
Intrinsic value per share varying WACC and Terminal Growth Rate
| WACC ↓ / TG → |
2.0% |
2.5% |
3.0% |
3.5% |
4.0% |
| 3.5% |
$1192
|
$1800
|
$3624
|
N/A
|
N/A
|
| 4.5% |
$676
|
$852
|
$1144
|
$1729
|
$3484
|
| 5.5% |
$455
|
$536
|
$649
|
$817
|
$1099
|
| 6.5% |
$333
|
$378
|
$436
|
$513
|
$622
|
| 7.5% |
$255
|
$283
|
$318
|
$361
|
$417
|
Current price: $379.27 | Highlighted row shows base case WACC (5.47%)
Verdict:
Significantly Undervalued
(Combined upside: +100.8%, DCF Confidence: High)
DCF Summary Comparison
| Company |
Current Price |
Historical DCF |
Analyst DCF |
Combined Upside |
Verdict |
| AMGN |
$379.27 |
$658.07
(+73.5%)
|
$865.37
(+128.2%)
|
+100.8%
|
Significantly Undervalued
|
Amgen Inc. (AMGN) is currently trading at $379.27, above the analyst consensus price target of $347.00, which implies an 8.5% downside. This suggests that, on average, analysts anticipate a modest correction or limited upside potential from current levels. A significant P/E contraction from 26.5x (TTM) to 16.3x (Forward) points to strong expected earnings growth in the near future, indicating fundamental improvements are anticipated by the market. However, the trajectory of analyst targets has been downward over the past year, reflecting a more cautious sentiment among covering analysts. The wide range of individual price targets also signals considerable uncertainty regarding Amgen's future valuation.
Key Findings
- The analyst consensus price target of $347.00 implies an 8.5% downside from Amgen's current trading price of $379.27, suggesting analysts do not see immediate upside at current levels.
- Amgen exhibits a substantial P/E contraction, with its TTM P/E of 26.5x projected to decrease to a Forward P/E of 16.3x. This 38.6% reduction indicates strong anticipated earnings growth.
- Analyst price targets have trended downward over the past year, declining by 4.9% from $345.14 a year ago to a more recent average of $328.40, signaling a softening outlook.
- A wide target range, spanning from $185.00 (-51.2% downside) to $432.00 (+13.9% upside), highlights significant divergence in analyst opinions and a high degree of uncertainty regarding Amgen's future valuation.
Price Target Trend Analysis
Analyst price targets for Amgen have shown a cautious trajectory over the past year. The current consensus target of $347.00 implies an 8.5% downside from the current price of $379.27, indicating that, on average, analysts do not view the stock as undervalued at its present trading level. Furthermore, the target evolution reveals a consistent downward revision, with the average target declining by 4.9% from $345.14 a year ago to a more recent $328.40. This trend suggests that analysts have become less optimistic about Amgen's near-term price potential, signaling a deteriorating sentiment or revised growth expectations.
P/E Trajectory Analysis
Amgen's P/E trajectory provides a compelling insight into earnings expectations. The company's Trailing Twelve Months (TTM) P/E stands at 26.5x, which is projected to compress significantly to a Forward P/E of 16.3x. This substantial 38.6% contraction signals that analysts are anticipating robust earnings growth in the upcoming fiscal year. For investors, this compression suggests that the market expects Amgen's earnings per share (EPS) to increase at a rate that justifies a lower forward earnings multiple, making the stock potentially more attractive on a forward-looking basis. The long-term projection of $23.33 in Forward EPS for 2027 further supports this outlook of sustained earnings expansion.
Analyst Price Targets
| Company |
Current Price |
Target Consensus |
Target Low |
Target High |
Upside |
Analysts |
Sentiment |
| AMGN |
$379.27 |
$347.00 |
$185.00 |
$432.00 |
-8.5%
|
18 |
Hold
|
Price Target Evolution
How analyst targets have changed over time - rising targets signal improving sentiment
| Company |
Last Month Avg |
Last Quarter Avg |
Last Year Avg |
Change (M vs Y) |
Trend |
| AMGN |
$328.40
(5)
|
$349.62
(13)
|
$345.14
(22)
|
-4.9%
|
Stable
|
Forward Estimates & P/E Comparison
Comparing trailing (TTM) vs forward P/E reveals market expectations for earnings growth
| Company |
Forward EPS |
Forward Revenue |
TTM P/E |
Forward P/E |
P/E Change |
Estimate Year |
| AMGN |
$23.33 |
$38.84B |
26.5x |
16.3x |
-38.6%
(Strong growth expected)
|
FY2027 |
Reading P/E Change: Negative change (TTM P/E > Forward P/E) suggests analysts expect earnings growth.
Positive change indicates earnings may decline. Large differences warrant investigation into the growth story.
Amgen Inc. (AMGN) presents a complex and highly divergent valuation profile. Against its current trading price of $379.27, the implied values derived from various methodologies span an exceptionally wide range, from a low of $97.73 to a high of $658.07. The median implied value across all six methods is $333.17, suggesting a potential overvaluation of 12.2% compared to the current market price. However, the overarching consensus assessment indicates that AMGN is currently 'Fairly Valued', pointing to a market equilibrium that balances the significant discrepancies between individual valuation models.
This wide dispersion underscores considerable uncertainty in accurately pinpointing Amgen's intrinsic value. While some models, particularly the Discounted Cash Flow (DCF), suggest substantial upside, others, such as the Price-to-Book (P/B) peer multiple, indicate significant downside. This necessitates a careful examination of the assumptions underlying each method and highlights that investors' perspectives on AMGN's valuation may vary widely depending on their preferred analytical framework.
Key Takeaways
- Amgen (AMGN) exhibits a remarkably wide valuation range, spanning from $97.73 to $658.07, indicating substantial disagreement among different valuation methodologies and a high degree of uncertainty regarding its intrinsic value.
- The DCF model projects significant undervaluation for AMGN, with an implied value of $658.07, representing a 73.5% upside from the current price. The P/E (Peer) method also suggests potential undervaluation, with an implied value of $434.23, or 14.5% upside.
- Conversely, the P/B (Peer) method implies a strikingly low value of $97.73, indicating a substantial 74.2% overvaluation. Both the EV/EBITDA (Peer) and P/S (Peer) methods also suggest the stock is overvalued, with implied values of $319.34 (-15.8%) and $315.32 (-16.9%), respectively.
- The Wall Street analyst consensus target of $347.00 is 8.5% below the current price, aligning with the view that the stock might be slightly overextended at present levels.
- The median implied value of $333.17, while suggesting a modest 12.2% overvaluation, is heavily influenced by the extreme divergence of the individual methods, particularly the high DCF and low P/B estimates.
Investment Implications
For investors considering Amgen, the valuation analysis points to a highly nuanced investment decision. The significant divergence across valuation methods, particularly the stark contrast between the optimistic DCF and the pessimistic P/B models, suggests that AMGN's valuation is subject to diverse interpretations and considerable risk. While the overall consensus labels the stock 'Fairly Valued,' investors must acknowledge that this equilibrium is a result of widely opposing views. Individuals relying heavily on cash flow generation might find the stock attractive based on the DCF analysis, whereas those prioritizing asset-based or sales-based peer comparisons would likely view it as overvalued.
This high degree of uncertainty implies that AMGN may not be suitable for investors seeking clear-cut valuation signals. A deeper dive into the specific drivers and assumptions behind each model, especially the growth rates in the DCF and the asset quality underlying the P/B, is crucial. Investors should establish their own conviction regarding Amgen's long-term growth prospects and capital efficiency to navigate this complex valuation landscape effectively. Without such conviction, the wide range of potential values indicates elevated risk.
Comprehensive Valuation Summary
Aggregated implied values from multiple valuation methods: P/E, P/B, EV/EBITDA, P/S (peer-based), DCF, and Analyst Targets
| Company |
Current Price |
Valuation Range |
Median Value |
Median Upside |
Methods |
Consensus |
| AMGN |
$379.27 |
$97.73 - $658.07
|
$333.17 |
-12.2%
|
6 |
Fairly Valued
|
Valuation Details by Method
Implied values from each valuation methodology for individual companies
AMGN – Amgen Inc.
Current: $379.27
Fairly Valued
| Method |
Implied Value |
Upside/Downside |
Basis |
| P/E (Peer) |
$434.23 |
+14.5%
|
Peer median P/E (18.6x) × Forward EPS ($23.33) |
| P/B (Peer) |
$97.73 |
-74.2%
|
Peer median P/B (5.24x) × Book Value per Share |
| EV/EBITDA (Peer) |
$319.34 |
-15.8%
|
Peer median EV/EBITDA (12.7x) × EBITDA - Net Debt |
| P/S (Peer) |
$315.32 |
-16.9%
|
Peer median P/S (3.98x) × Revenue per Share |
| DCF |
$658.07 |
+73.5%
|
Revenue × FCF Margin projection (normalized FCF) |
| Analyst Target |
$347.00 |
-8.5%
|
Consensus of 18 analysts |
| Median |
$333.17 |
-12.2%
|
Based on 6 methods |