Last Update 15 Dec 25

Fair value Increased 4.97%

AMGN: Margin Expansion And Pipeline Progress Will Drive Long-Term Upside Potential

Analysts have nudged their fair value estimate for Amgen higher to approximately $425 from about $405, reflecting a more constructive view on the company as a defensive large cap biotech with improving margin potential and an innovation pipeline that, while still facing patent expiry and execution risks, is increasingly seen as capable of supporting long term earnings power.

Analyst Commentary

Recent Street research on Amgen highlights a balanced but gradually improving sentiment backdrop, with a growing cohort of bullish analysts positioning the company as a core large cap biotech holding. While some continue to emphasize uncertainties around the long term impact of patent expiries, there is increasing recognition that Amgen's diversified portfolio, emerging launches and late stage pipeline can sustain earnings growth and justify higher valuation multiples over time.

More cautious voices still frame Amgen as fairly valued in the near term, pointing to limited visibility on how quickly new assets can offset erosion in mature franchises. These analysts generally anchor their views on stable, defensive cash flows rather than outsized upside, and they tend to keep ratings around market perform or hold while awaiting clearer evidence of execution on growth drivers.

By contrast, bullish analysts are leaning into the stock's defensive characteristics and potential for upside as innovation and margin expansion become more visible. They see Amgen as well positioned within large cap biopharma given its balanced mix of established products, growing specialty assets and exposure to next generation modalities that could re accelerate the top line and support sustained earnings growth.

Against this backdrop, Street targets and ratings on Amgen now span a spectrum from more conservative equal weight views to more constructive outperform recommendations, with recent target moves and initiations skewing incrementally positive. This divergence underscores that future share performance is likely to hinge on the company's ability to demonstrate durable revenue growth, deliver on new product launches and continue to lift profitability.

Bullish Takeaways

Multiple bullish analysts have initiated or reiterated Outperform views on Amgen, reflecting growing confidence that the company can transition from a primarily defensive holding to a compounder capable of sustaining above market earnings growth.
Recent positive target revisions, including price objectives in the high $300s, signal that optimistic forecasts now factor in stronger long term contribution from emerging launches and the pipeline, supporting a higher justified multiple on forward earnings.
Bullish analysts increasingly emphasize Amgen's improving margin trajectory and disciplined capital allocation, arguing that operating leverage and cash flow deployment can unlock additional value even if top line growth remains moderate.
Within the broader large cap biopharma space, Amgen is being grouped with peers seen as key beneficiaries of the next wave of innovation, a designation that supports relative valuation upside as execution on clinical milestones and launches continues.

What's in the News

The FDA granted full approval to IMDELLTRA (tarlatamab) for extensive stage small cell lung cancer after platinum-based chemotherapy, with Phase 3 data showing a 40% reduction in risk of death versus standard care. The NCCN named it the only Category 1 preferred option in this setting (company announcement).
The FDA approved UPLIZNA (inebilizumab) for generalized myasthenia gravis in adults who are AChR or MuSK antibody positive, making it the first and only CD19 targeted B cell therapy for gMG and expanding its use beyond NMOSD and IgG4 related disease (company announcement).
Repatha (evolocumab) delivered statistically significant reductions in major adverse cardiovascular events in high risk patients without prior heart attack or stroke in the Phase 3 VESALIUS CV trial, reinforcing its role in primary prevention and supporting broader guideline based use (company announcement).
The FDA approved TEZSPIRE (tezepelumab) as an add on maintenance treatment for chronic rhinosinusitis with nasal polyps in patients 12 and older, following WAYPOINT Phase 3 data showing clinically meaningful reductions in polyp size and near elimination of surgery need. Similar EU approval and a positive opinion were also secured (company announcements).
Amgen and peers including Pfizer are preparing to sell select brand medicines directly to U.S. patients at insurer negotiated prices via the forthcoming TrumpRx platform, positioning the company within a high profile federal push to expand access to lower cost drugs (Reuters).

Valuation Changes

Fair Value Estimate has risen modestly to about $425 from roughly $405, reflecting a somewhat more constructive long term outlook despite ongoing risk factors.
Discount Rate has increased slightly to around 7.6 percent from about 7.3 percent, signaling a marginally higher required return and risk adjustment in the model.
Revenue Growth Assumptions have been trimmed to approximately 5.6 percent from about 7.1 percent, indicating a more conservative view on top line expansion over the forecast period.
Net Profit Margin Expectations have edged higher to roughly 32.7 percent from about 31.0 percent, incorporating improved margin efficiency and cost leverage into the earnings profile.
Future P/E Multiple has risen slightly to about 20.7x from roughly 20.3x, suggesting a modestly higher valuation placed on forward earnings power.

Expanding product volumes and AI-driven R&D advancements position Amgen to exceed revenue and margin expectations through frequent, high-impact new launches across key therapeutic areas.
Strong resilience to industry pricing pressures, global expansion, and ample M&A capacity enable Amgen to unlock long-term earnings growth and broaden its market reach.
Policy uncertainty, patent expirations, rising R&D costs, acquisition risks, and biosimilar competition threaten long-term revenue growth, profit margins, and earnings stability.

Catalysts

About Amgen

Amgen Inc. discovers, develops, manufactures, and delivers human therapeutics worldwide.What are the underlying business or industry changes driving this perspective?

Analyst consensus believes Amgen's volume-led sales growth will drive strong revenue, but this likely understates the true trajectory, as double-digit volume expansion now spans 15 products and is accelerating in obesity, rare disease, and biosimilars; this breadth positions Amgen to consistently outperform revenue expectations and deliver operating leverage.
Consensus highlights pipeline momentum, but the combination of accelerated AI-enabled R&D, streamlined dose-escalation strategies, and a robust global late-stage pipeline-spanning obesity (MariTide), oncology (BiTE platform), inflammation, and rare diseases-suggests new product launches will not only be more frequent but also deliver higher peak sales and superior long-term margins than currently recognized.
Amgen's unique resilience to pricing pressures and payer obstacles, aided by leadership in biologics and biosimilars, provides a powerful buffer in an industry facing ongoing net price erosion; this should result in higher-than-expected net margins and free cash flow as biologic adoption increases globally and biosimilar regulations further soften.
The company's extensive global footprint, growing access initiatives, and direct-to-consumer strategies position its therapies for accelerated uptake among the rapidly expanding populations affected by aging and lifestyle-related chronic diseases, supporting a step-change in addressable market size and multi-year top-line compounding growth.
With an increasingly unlevered balance sheet post-Horizon acquisition, Amgen now has exceptional capacity to execute bolt-on M&A and scale pipeline investments in underserved segments like cardiometabolic and genomic medicine, creating upside optionality for sustained earnings growth and outperformance relative to forecasted capital allocation returns.

Amgen Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more optimistic perspective on Amgen compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
The bullish analysts are assuming Amgen's revenue will grow by 7.1% annually over the next 3 years.
The bullish analysts assume that profit margins will increase from 19.0% today to 31.0% in 3 years time.
The bullish analysts expect earnings to reach $13.3 billion (and earnings per share of $24.41) by about September 2028, up from $6.6 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 20.3x on those 2028 earnings, down from 22.8x today. This future PE is greater than the current PE for the US Biotechs industry at 15.3x.
Analysts expect the number of shares outstanding to grow by 0.15% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.28%, as per the Simply Wall St company report.

Amgen Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying global efforts to regulate and cap drug prices, highlighted by frequent references to ongoing discussions with government officials and the shifting policy landscape, may restrain Amgen's ability to realize price increases, putting long-term pressure on revenue growth and net margins.
Patent expirations and the rise of biosimilars are already impacting legacy brands like Prolia, which declined in revenue due to lower net selling price and early biosimilar launches; this trend threatens to accelerate as more cornerstone products lose exclusivity, leading to heightened competition and shrinking profit margins.
Elevated research and development expenses are repeatedly mentioned as Amgen ramps investment in late-stage pipeline assets to offset legacy declines-however, increased R&D spending may not consistently yield commercialized products, which could negatively affect earnings stability if clinical failures or delays occur.
The company's strategy includes large-scale acquisitions such as Horizon Therapeutics, with management explicitly acknowledging ongoing integration efforts and additional business development transactions-this raises the risk that anticipated synergies may not materialize, potentially resulting in balance sheet strain and diminished return on invested capital over the long term.
Amgen's growing focus on biosimilars exposes it to industry-wide commoditization and regulatory complexity, with executives noting that market and regulatory environments remain volatile-a reduction in barriers may benefit initial volume but could ultimately drive pricing downward and compress operating margins as competition in the biosimilars space intensifies.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bullish price target for Amgen is $404.87, which represents two standard deviations above the consensus price target of $311.88. This valuation is based on what can be assumed as the expectations of Amgen's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $405.0, and the most bearish reporting a price target of just $180.0.
In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $42.8 billion, earnings will come to $13.3 billion, and it would be trading on a PE ratio of 20.3x, assuming you use a discount rate of 7.3%.
Given the current share price of $279.97, the bullish analyst price target of $404.87 is 30.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Amgen?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystHighTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystHighTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystHighTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Biosimilars And Targeted Therapies Will Expand Global Chronic Care Markets