A Fresh Look at Amgen (AMGN) Valuation After FDA Expands Repatha’s Market Opportunity

Amgen (AMGN) just caught the market’s eye with a key regulatory win. The FDA expanded the approved use of Amgen’s blockbuster drug Repatha, opening access to adults at risk for major adverse cardiovascular events, even those who haven’t been diagnosed with cardiovascular disease. Alongside this, the agency reinforced Repatha’s use for a rare genetic cholesterol disorder and underlined the importance of pairing it with diet and exercise. The headline here is simple: Amgen’s addressable market for Repatha just received a major boost, prompting investors to reconsider what future growth might look like. This news comes as Amgen’s stock performance has been a tug of war. Shares are up over 10% year to date, but still down 11% over the past year, suggesting recent momentum may be building after a stretch of investor caution. Just last month, Amgen closed its acquisition of rare disease therapeutics maker Horizon. With annual net income up more than 10%, the company is beginning to show renewed confidence. With shares now reacting to Repatha’s expanded market, the key question is whether there is room for the stock to advance further or if the market already reflects the potential of this new growth driver.

Most Popular Narrative: 7.8% Undervalued

According to community narrative, Amgen is currently priced below its estimated fair value, suggesting a potentially attractive entry point for investors focused on future growth catalysts.

Advancements in personalized and targeted therapies, reflected in the robust late-stage pipeline (for example, MariTide for obesity and type 2 diabetes, Repatha and olpasiran for cardiovascular indications, and multiple bispecific T-cell engagers for oncology), position Amgen to launch high-margin, first-in-class products. These products could drive both top-line growth and margin expansion in the coming years.

Curious how analysts justify Amgen’s higher fair value? Their forecast relies on a bold combination of future earnings growth, improved margins, and a notably ambitious profit multiple. Want to see which aggressive assumptions set this target apart from the rest? The full narrative explains the numbers behind the valuation.

Result: Fair Value of $311.88 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing drug pricing pressures and fierce biosimilar competition could quickly challenge Amgen’s growth story if current trends accelerate.

Find out about the key risks to this Amgen narrative.

Another View

While community and analyst fair value estimates suggest Amgen is undervalued, our SWS DCF model indicates an even larger gap between price and fair value. Do fundamentals show untapped potential, or is there something investors are missing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Amgen for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Amgen Narrative

If you have a different take or want to dive into the numbers yourself, you can craft your own perspective in just a few minutes. Do it your way.

A great starting point for your Amgen research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Smart Investment Ideas?

Take your portfolio to the next level by uncovering stocks that match your goals. Don’t let standout opportunities slip away. Use these powerful ideas to stay ahead.

• Capture reliable income with stocks yielding over 3% and see which companies make the shortlist in our dividend stocks with yields > 3%.
• Tap into futuristic breakthroughs by checking out quantum computing stocks. This feature highlights innovators pushing the boundaries of tomorrow’s technology.
• Spot undervalued gems that may be primed for growth when you scan our handpicked undervalued stocks based on cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com