2024-02-01 02:30:29 ET
Summary
- While revenue growth is steady 2014-2026E, the share price is up nearly threefold.
- Buybacks minimized equity and raised debt, limiting future per-share gains.
- Low R&D investment amid biosimilar competition and market pressures.
- $307 target price; ‘Hold’ or suggested options strategy for professionals.
Investment Thesis
Amgen ( AMGN ) has shown steady revenue growth from 2014 to 2026E, accompanied by a significant increase in share price. However, its heavy reliance on share buybacks, funded through increased debt, constrains future gains per share. The company's modest investment in R&D, amidst intense biosimilar competition and market pressures, raises concerns.
Despite a target price of $307, suggesting a 'Hold' stance, Amgen faces challenges, including high debt levels and a high debt-to-equity ratio, making it vulnerable in economic downturns. The acquisition of Horizon Therapeutics and internal restructuring, including the appointment of new R&D leadership, could offer some strategic advantages. Nonetheless, due to these financial and competitive pressures, the company's potential for future share price growth remains uncertain.
Company Insights
Amgen, a pioneering biotechnology company founded in 1980, is dedicated to advancing patient health by developing innovative therapeutics. It focuses on severe illnesses with unmet medical needs and boasts a significant global presence in approximately 100 countries....
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Amgen: Debt-Funded Buybacks Constrains Future Gains Per Share