Is Amgen Poised for Growth After Recent 4% Price Dip?

If you have been debating whether Amgen deserves a place in your portfolio, you are not alone. The last few months have kept investors guessing, with a 6.7% price rise over the past 30 days followed by a recent 4.0% dip just in the last week. Year to date, Amgen’s stock is still up a solid 12.3%, adding to a longer-term growth story, even after a 5.1% pullback over the past year.

So what has been moving Amgen lately? Buzz in the sector has been driven by developments around their cardiovascular drug pipeline and the company’s focus on high-growth therapeutic areas, sparking new optimism in the biopharma world. Investors are recalibrating their expectations, reflecting both excitement about future innovations and some changing perceptions of risk that come with Amgen’s expanding portfolio.

But does this make Amgen undervalued or overvalued right now? To help answer this, let’s turn to Amgen’s value score, an objective measure that factors in several rigorous valuation checks. Amgen currently scores a 4 out of 6, signaling undervaluation in most metrics considered. Of course, no score is the whole story. In the next section we will dive into the various valuation approaches investors use and reveal an even more insightful way to gauge Amgen’s true market value.

Why Amgen is lagging behind its peers

Approach 1: Amgen Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by forecasting its future free cash flows and discounting them back to today. This gives investors a clearer sense of what a stock might really be worth based on its underlying business.

For Amgen, analysts currently project Free Cash Flow (FCF) for the latest twelve months at $10.70 billion, with estimates showing steady growth over the next five years. By 2029, projections suggest FCF could reach $15.85 billion, with longer-term forecasts extending to over $19 billion by 2035, according to specialist extrapolations from Simply Wall St.

Using a two-stage Free Cash Flow to Equity model, this approach values Amgen shares at an estimated intrinsic value of $618.90, accounting for all available cash flow projections and expectations. When compared to the latest share price, the implied discount stands at approximately 53.0 percent. This suggests that, based on current assumptions, Amgen stock may be significantly undervalued according to the cash flow it is expected to generate in the coming years.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Amgen.

Our Discounted Cash Flow (DCF) analysis suggests Amgen is undervalued by 53.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Amgen Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is widely favored as a valuation tool for profitable companies like Amgen because it directly compares the current share price to the company’s earnings. This makes it a clear indicator for investors assessing value in relation to ongoing profitability.

Growth outlook and perceived risk both affect what qualifies as a “fair” PE. Companies with high expected earnings growth, durable profit margins, or lower perceived risks can command higher PE multiples. In contrast, slower-growing or riskier peers tend to trade at lower PE ratios.

Right now, Amgen is trading at a PE ratio of 23.7x. This is higher than the average for the Biotechs industry, which sits around 17.8x, but significantly below its peer group average of 43.8x. This suggests Amgen is somewhat conservatively priced compared to similar large peers.

Instead of just comparing to industry averages, Simply Wall St’s proprietary “Fair Ratio” for Amgen is 25.5x. This metric takes into account Amgen’s specific growth forecasts, risk profile, profitability, scale, and its position within the broader industry. As a result, it offers a more comprehensive and relevant benchmark for today’s market than a simple average.

By comparing Amgen’s actual PE (23.7x) to its Fair Ratio (25.5x), the company’s shares are trading below what would be considered a fair valuation given its fundamentals. This suggests potential undervaluation on this measure.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Amgen Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply the story you believe about a company, your perspective on how Amgen's business will evolve, which drives your own forecasts of future revenue, earnings, and what you consider a fair value for the shares.

Instead of just relying on numbers, Narratives help you connect Amgen's business story with a financial forecast, and then link that to a fair value you can act on. Narratives are easy to create and compare using Simply Wall St’s Community page, where millions of investors share their investment stories. Each Narrative helps you see when a company may be undervalued or overvalued by comparing your own or others’ Fair Value with the current share price. This makes it easier to decide when to buy or sell.

Best of all, Narratives update automatically as news breaks or new earnings data comes in, so your view stays relevant. For example, one Amgen Narrative points to a fair value of $405.00, driven by strong growth in biosimilars and innovative therapies, while another takes a more cautious approach, estimating a fair value of just $180.00 based on pricing and patent pressures. Which story do you believe?

For Amgen however, we'll make it really easy for you with previews of two leading Amgen Narratives:

🐂 Amgen Bull Case

Fair Value: $404.87

30.7% undervalued relative to current price

Expected revenue growth: 7.1%

• Anticipates robust revenue and margin expansion through new product launches across biosimilars and targeted therapies, supported by AI-driven R&D and global reach.
• Sees Amgen's resilience to pricing pressures and flexible capital structure as key to unlocking further growth, with ample capacity for M&A and pipeline investment.
• Highlights risks around drug pricing regulation, patent expiries, rising R&D costs, and acquisition integration, but believes upside from pipeline and international expansion will dominate over the next three years.

🐻 Amgen Bear Case

Fair Value: $218.89

32.8% overvalued relative to current price

Expected revenue growth: -0.5%

• Warns that reliance on legacy drugs and looming patent expiries exposes Amgen to revenue and margin pressure from intensified biosimilar and innovative competition.
• Notes regulatory, pricing, and acquisition integration risks threaten to constrain profitability and undermine long-term growth, despite operational improvements.
• While acknowledging pipeline potential and efficiencies, this view expects falling profit margins and subdued earnings, resulting in a significantly lower fair value estimate.

Do you think there's more to the story for Amgen? Create your own Narrative to let the Community know!

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.

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